Morning Market Thoughts
Good morning. Thanks to Disney, we are looking at a slightly lower open this morning. That’s to be expected after the 1.25% move we had in the S&P. In such a case, the market typically takes a rest as traders consider whether they got a bit too giddy the day before. So they pull back a bit. I wouldn’t focus on the pullback too much. Instead, consider that money is moving into the market. Yesterday, 80% of the S&P components closed higher. That’s a pretty strong signal that ultimately, the S&P will continue to rally. My suggestion is that you work on having a bias toward buying — buying uptrending stocks on pullbacks to support. The challenge in our market lately is that many breakouts don’t amount to much, so you don’t make the type of money you thought you were going to make. So watching for a different type of opportunity merits consideration.A few stocks I’m watching are Constellation Brands (STZ) as it continues to break out of a volatility squeeze, and Times Warner (TWX), which is in a tight little consolidation above the 50-day moving average. I’m also watching Comcast (CMCSA), which is getting really perky and seems like it’s ready to break out.
Also, look at the tobacco stocks. Philip Morris (PM) is up at an all time high, and paying 4%, Altria Group (MO) is also up at an all time high, and pays 3.55%. Reynolds American (RAI) is not too far behind, being just about a buck below its all time high — and it pays 3.37% in dividends. I’m telling you, these stocks are all worth owning. Their dividends are all high enough to be attractive, but low enough to be considered safe. Imagine owning these stocks and selling out-of-the-money calls on them to bring in extra cash. If you used that strategy on 8 months of the year, avoiding the months where earnings were due to be released, you’d likely have a stock that yields north of 10% annually. And if the stock keeps going up…a nice capital gain. Heck, I’d rather own Philip Morris than Apple…though I would be able to buy the new iPhone with proceeds from my dividends on Philip Morris.
My stem cell procedure went really well, though I didn’t like having to take a valium before the procedure. I’ve never taken valium before, and it made me pretty woozy. For the life of me, I can’t understand why that stuff is addictive. But I’ve got a little bruise in my hip where the drill went in, but my knee and shoulder already feels better…though I am pretty fatigued this morning. Probably nothing that a couple cups of coffee won’t fix.
See you in the forum. If you’ve got any questions or want to make comments about stocks, I am happy to oblige.
Dan
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