Weighing The Week Ahead: Looking Beyond The Obviou

I’ll add a few more conclusions in today’s Final Thought.

Quant Corner

We follow some regular featured sources and the best other quant news from the week.

Risk Analysis

I have a rule for my investment clients. Think first about your risk. Only then should you consider possible rewards. I monitor many quantitative reports and highlight the best methods in this weekly update.

The Indicator Snapshot

Short-term trading conditions have improved to mildly bullish for technically-based methods. This is a good indication for short-term traders.

The technical background for long-term trading remains at “slightly bearish.”

Fundamental analysis remains strongly bullish. Earnings are excellent and the risk indicators are low. The overall investment climate has improved to “bullish.”

The Featured Sources:

Bob Dieli: Business cycle analysis via the “C Score.

Brian Gilmartin: All things earnings, for the overall market as well as many individual companies.

RecessionAlert: Strong quantitative indicators for both economic and market analysis.

Georg Vrba: Business cycle indicator and market timing tools. None of Georg’s indicators signal recession yet, but the unemployment rate indicator may give a signal soon.

Doug Short and Jill Mislinski: Regular updating of an array of indicators. Great charts and analysis.

Insight for Traders

Check out our weekly “Stock Exchange”. We combine links to important posts about trading, themes of current interest, and ideas from our trading models. This week, with no activity from our trading models, I focused on the question of when you should walk away from your trading. In addition to the mandatory advice from Kenny Rogers, I reviewed the history of Richard Dennis and the Turtles. This is a great story about nature or nurture, which investors will enjoy. It all started with a small bet, but hundreds of millions of dollars followed. We also provided sector ratings from Oscar and Felix, featuring the Russell 1000.

Insight for Investors

Investors should embrace volatility. They should join my delight in a well-documented list of worries. These are the best opportunities.

Best of the Week

If I had to recommend a single, must-read article for this week, it would be Ashby Daniels’s post, Should You Ignore Financial TV? The entire post is well worth reading, but here are the high spots:

First, a long list of smart, noted experts have “incorrectly made market calls for what was surely broadcast as the apocalypse.” (large version here)

Second, market declines at the end of 2018 sent many in a rush to the exits.

And finally, if you can’t stop watching or reading financial commentary you are hardly alone. You should try what he calls a “lifeboat drill” making sure that you have enough assets safely held to assure the income you need.

Stock Ideas

Chuck Carnevale continues his series on bargain hunting in the wake of the 2018 stock declines. Turning to the communications sector, he finds five interesting candidates. As always, he provides an excellent lesson in fundamental analysis along the way.

Blue Harbinger likes New Residential (NRZ). A 13.8% yield comes with risk. Mark analyzes the business model, the recent price decline, and the variables affecting future returns.

Avi Salzman (Barron’s) analyzes the pricing pressure problems facing pharma. His list of companies in Congressional “crosshairs” and his recommendations are interesting places for your own research to start.

Morningstar suggests 10 Cheap Stocks With Growing Dividends. See the article for details about the methodology and also for stocks cut from their current dividend growth index.

Personal Finance

Seeking Alpha Senior Editor Gil Weinreich’s Asset Allocation Daily is consistently both interesting and informative. Each week he highlights stories of interest for both advisors and investors. This week I especially enjoyed his discussion of “when to sell,” and the idea that it was a stumbling block for man professional fund managers. He plays off of a post by Ploutos analyzing recent research on the subject.

Abnormal Returns is an important daily source for all of us following investment news. I read it daily, finding many good ideas. The Wednesday personal finance theme is of special interest for investors. Among the usual collection of excellent choices, I especially liked Trent Hamm’s lessons from the government shutdown. He has seven ideas – timely and practical advice.

Watch out for…

Gold. The Belle Curve takes a fresh look at gold. Blair was stimulated to write her update by the first question in an interview of a top investment advisor, Peter Mallouk: “So, what are your thoughts on gold?” She writes:

I thought we stopped talking about gold when Mr. T made an appearance on Bloomberg and talk radio became saturated with commercials urging us to buy gold in IRAs. But apparently gold remains a popular subject among investors, so I decided to revisit my thoughts on gold.

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