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Weekly Market Update: April 3, 2006 |
Last Week's Action: We saw the market exhibit a bit more action last week and most of it came as a result of the Fed meeting on Tuesday. As expected, rates were increased by 25 basis points, and the committee left it's policy statement alone. The committee will continue to let economic data drive their decision making. (Editor Note: I would hope they would use economic data to drive their decision making.) Basically what the FOMC is saying is that should inflation pick up, then rate hikes will continue. We saw some of our competitors buying puts ahead of the announcement, as well as betting that Wednesday would be a bloodbath. If our competitors did not close their positions by market close Tuesday, then they were likely hurt bad on Wednesday. A very impressive rally Wednesday, that really did not have much fundamental support. We will say that a market that can rally in the face of adversity is an indicator of a relatively strong market. We will have to wait and see if this plays out. We should also note that there have been few noteworthy earnings warnings for Q1. This is another good sign for the bulls.
The Week Ahead: Looking ahead, we'll be watching oil prices which have creeped up to $67/bbl. The major economic news will be the release Friday of jobs data. Expectations are for an increase of around 170,000 new jobs. Earnings reports will trickle in, but the big guys won't start to report until week after next as Alcoa officialy kicks off earnings season.
MTP Update: Fundamental concerns aside, our ZSI is decidedly strong. If the NASDAQ can sustain above 2360, we could be in for a nice
The NASDAQ is at very strong resistance right now in the 2320-2360 area. We must clear and sustain several closes above 2360 to sustain this bullish trend. Our ZSI remains positive, and we remain long in our MTP Portfolio.
Hot Stock/Concept Portfolio Update:
*CXN: Good price action on Friday. Once we clear $1.38 which is strong resistance, we will struggle at the $1.50 level, followed by $1.83.
*HH: The stock has moved fast and hard since our call last week. We are up almost 20% on this play and will look to take some profits shortly.
*FRPT.OB: We love this company. Force Protection manufacturers mine-proof vehicles for use by the US military.
From the company's website:
"Force Protection, Inc. is the world's leading manufacturer of ballistic- and blast-protected vehicles, which have been used to support armed forces and security personnel in Iraq, Afghanistan, Kosovo and other hot spots around the globe.
Headquartered on a sprawling campus near Charleston, South Carolina, Force Protection also has become the nation's leading center for blast protection technology and research to counter improvised explosive devices (IEDs).
Built for a variety of missions and designed for rapid adaptation, Force Protection's specialty vehicles provide the solution for a 360-degree battlefield where the "front line" is on all sides. From the soldier on the ground to government and military leaders in Washington, the message is clear: Force Protection offers a proven, tested solution to the problem of IEDs, land mines, roadside bombs, and hostile fire."
Please take a moment to visit the company's website. This link takes you to a very clever advertisement. http://www.forceprotection.net/investors/profile.html
Unfortunately, the geopolitical issues we are facing today make this company an attractive acquisition for our Concept Portfolio. We will communiate stops and targets as necessary. For now it will remain a core holding.
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