Investors Nervous as Negative Economic Numbers Persist
Fears of a continued and even deepening recession caused stocks to plunge on Tuesday, falling to 2 month lows. The sudden drop was felt most in the commodities markets, with oil nearing the $60/barrel range. Stocks have been slowly going lower since the 2nd week of June as the 3 month stock market rally has hit a wall. Wednesday started out with another drop in stocks until Wall Street erased most of its losses by end of day, as investors set aside concerns about the economy to gear up for the quarterly reporting period. The initial jobless claims came in lower than expected for the week, calming investors for at least a day.
This week we have seen a rush towards safer stocks as investors seek protection from the volatility of market swings as the Dow falls closer to 8,000. Although some of the commodity stocks (oil) that we’ve recommended the last few months are attractive during the overreaction, we also recognize that it would be wise to diversify into solid blue chips and that’s exactly what our Bullish pick is. Our Bearish pick is a company that has had a tremendous ride the last 3 months, but we think it’s more likely to drop than rise in the short term and we also don’t like its long term outlook or the 90% dividend cut.
HJ Heinz Company (HNZ) - This week we have seen a rush towards safer stocks as investors seek protection from the volatility of market swings as the Dow falls closer to 8,000. Although some of the commodity stocks (oil) that we’ve recommended the last few months are attractive during the overreaction, we also recognize that it would be wise to diversify into solid blue chips and that’s exactly what our Bullish pick is. Our Bearish pick is a company that has had a tremendous ride the last 3 months, but we think it’s more likely to drop than rise in the short term and we also don’t like its long term outlook or the 90% dividend cut. Full Story
International Paper (IP) - The last 3 months have seen a nice rally that has carried up many companies. IP is one of those whose incredible rise makes us think that it’s not a company that can sustain such an upward swing and most likely will drop in the short term. They have surpassed expectations in profit mainly due to a tax credit for a chemical process they were already doing. Although the company has reported that demand for their product will increase as China increases their consumption, the truth is that the “paperless” office and the move towards other green initiatives is hurting the bottom line. Full Story
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HJ Heinz Company (HNZ) - This week we have seen a rush towards safer stocks as investors seek protection from the volatility of market swings as the Dow falls closer to 8,000. Although some of the commodity stocks (oil) that we’ve recommended the last few months are attractive during the overreaction, we also recognize that it would be wise to diversify into solid blue chips and that’s exactly what our Bullish pick is. Our Bearish pick is a company that has had a tremendous ride the last 3 months, but we think it’s more likely to drop than rise in the short term and we also don’t like its long term outlook or the 90% dividend cut.
International Paper (IP) - The last 3 months have seen a nice rally that has carried up many companies. IP is one of those whose incredible rise makes us think that it’s not a company that can sustain such an upward swing and most likely will drop in the short term. They have surpassed expectations in profit mainly due to a tax credit for a chemical process they were already doing. Although the company has reported that demand for their product will increase as China increases their consumption, the truth is that the “paperless” office and the move towards other green initiatives is hurting the bottom line.