This past week in the stock market has been something we have not seen much in recent months — a would-be rollercoaster ride as investors face renewed concern over the European economies and digest the first inning of corporate earnings reports for 1Q 2012. To me, it confirms what I shared with you last week — my view that the risk-to-reward profile in the market shifted to a near-term neutral position. With corporate earnings announcements set to pick up next week, I recommend reviewing existing positions, as well as those you have been eyeing. In addition, revisit both entry points as well as exit points. Odds are we will see a pick up in volatility alongside information flow in the coming weeks, and I find it best to be prepared to book profits if underlying situations change, rather than to be a greedy investor pig and get slaughtered.
Know When Not to be Tempted
Mindful not to be greedy or get slaughtered, three stocks caught my eye this week. The first stock was AOL, Inc., which sold more than 800 patents to Microsoft for more than $1 billion. As you can imagine, AOL shares jumped significantly. But in my view, this cash infusion does not address any of the company’s underlying problems. Moreover, with Facebook’s pending initial public offering and Yahoo once again restructuring, the competitive landscape is going to increase considerably. Also, the demographics are moving against AOL. When was the last time you heard someone say they had to check their AOL mail or they were going to message someone via AOL? It likely has been years! Despite a management change a few years ago, the company’s revenues continue to come under pressure, even though consumers are increasingly migrating toward digital content consumption, a cornerstone of my Always On, Always Connected PowerTrend.
The second stock is Nokia Corp., a company that continues to struggle as it transitions its business from one that is mobile phone-centric to one that emphasizes smartphones and tablets. Recent reports from Research in Motion and HTC point to the smartphone space turning into a blood bath. The news that Nokia will miss its 1Q 2012 and 2Q 2012 targets confirms this reality. Some investors will be tempted because Nokia’s shares have fallen below the $5 level. But until the company introduces new smartphone products — yes, that’s plural, as in more than one smartphone — that gain market traction, it’s best to stay clear of Nokia for the time being.
The third stock is Zillow Inc., with its shares going on an unbelievable run in recent months to rise more than 68% year-to-date. The gain reflects a much-anticipated rebound in the domestic housing industry. Despite that performance, or perhaps because of it, insiders have been unloading shares during the last six months.
The logical question that you’re probably asking right now is, “Well, if I own shares of AOL, Nokia or Zillow, what should I be doing?” Subscribers to my investment newsletter, PowerTrend Profits, will know exactly what I think they need to do with the shares of those companies to maximize their returns during the coming quarters.
Quick PowerTrend Hits
Each and every week there are a number of supporting data points for my PowerTrend way of investing. Here are just a handful of them:
• Always On, Always Connected — Advertising dollars follow where people are consuming their content and eMarketer predicts that U.S. online display ad spending will see a 24.1% increase this year to $15.4 billion. Meanwhile, industry research firm Advertiser Perception did a study on display ad buying and found that more than half of U.S. marketers and agencies planned to increase their social media display ad spending on sites like Facebook in the next 12 months.
• Living Longer Lives — A new study revealed that more than one in three Americans who are classified as slightly overweight based on their body mass index scores may actually be obese. This supports the Fattening of the Population aspect of this PowerTrend.
• The Cash Strapped Consumer — Consumers are feeling the pain at the register when buying groceries. That situation looks likely to intensify as U.S. corn stockpiles are forecast to be the smallest in 16 years by August. In addition, soybean reserves are poised to be lower than the government expected. Also of note, a new poll from Cricket Communications shows that 50% of people expecting a tax refund say they plan to spend the money on bills, household expenses and other basic needs.
• Safety & Security — Once again, cyberattacks are in the news as another 750,000 victims had their personal data, including social security numbers, stolen when Eastern European hackers infiltrated health department servers.
• New Demand, New Solutions — Autotrader.com reported record site traffic in February, which supports improving auto-production forecasts and points to a potential pick-up in replacement demand for the existing auto fleet, which has an average life of more than 10 years.
If you want to learn more about these PowerTrends, I invite you to listen to my free teleconference on Wednesday, April 25, at 2 p.m. EDT. The 60-minute, interactive call will let me talk in-depth about my eight hidden “PowerTrends,” which will drive trillions in market profits over the next several years. I will reveal what I believe lies ahead for the markets in the next couple of months, and much more. Plus, you’ll have a chance to ask me your own question — LIVE.
The teleconference will be a truly interactive experience with special poll questions that will let you voice your opinions. This is one phone call you don’t want to miss! But to make sure that you have a space reserved to participate, you MUST sign up and give us your correct contact information. Once you provide your contact information, we will call you on April 25 at about 2 p.m. To sign up now, please click here.
Upcoming Appearances
• On Monday, April 16, listen for my weekly appearance on America’s Morning News to talk about the economy, the stock market, stocks and more.
• Remember to sign up today for my teleconference on Wednesday, April 25, at 2 p.m. EDT. The 60-minute, interactive call will let me talk in-depth about my eight hidden “PowerTrends,” which will drive trillions in market profits over the next several years. Once you provide your contact information, we will call you on April 25 at about 2 p.m. To sign up, please click here.
• On Saturday, April 28, I will address the American Association of Individual Investors (AAII) Computerized Investing Special Interest Group in McLean, Va.
• Please join me for the Las Vegas Money Show, May 14-17, at Caesar’s Palace. To register, call 1-800/970-4355 and mention priority code 026656 or go to ChrisVersace.lasvegasmoneyshow.com.
Next Week
As we look ahead to next week, the pace of corporate earnings will accelerate significantly, as will the volume of data we’ll need to be putting under the microscope.
Monday, April 16
Retail Sales (March)
Empire Manufacturing Index (April)
Business Inventories (February)
Charles Schwab Corp. (SCHW)
Citigroup Inc. (C)
JetBlue Airways (JBLU)
United Continental (UAL)
Tuesday, April 17
Housing Starts (March)
Building Permits (March)
Industrial Production (March)
Manufacturing Capacity Utilization (March)
Cree Inc. (CREE)
CSX Corp. (CSX)
Forest Laboratories (FRX)
Goldman Sachs (GS)
Intel Corp (INTC)
Intuitive Surgical (ISRG)
Johnson & Johnson (JNJ)
The Coca-Cola Company (KO)
USG Corp. (USG)
Yahoo! Inc. (YHOO)
Wednesday, April 18
MBA Mortgage Index
American Express (AXP)
Badger Meter (BMI)
Dover Corp. (DOV)
eBay Inc. (EBAY)
Polaris Industries (PII)
Qualcomm Inc. (QCOM)
Stanley Black & Decker (SWK)
YUM! Brands (YUM)
Thursday, April 19
Weekly Initial & Continuing Jobless Claims
Existing Home Sales (March)
Philadelphia Fed Index (April)
Leading Indicators (March)
Arbitron Inc. (ARB)
Chipotle Mexican Grill (CMG)
DuPont (DD)
Microsoft (MSFT)
New York Times Co. (NYT)
Sherwin-Williams (SHW)
Friday, April 20
General Electric (GE)
Honeywell International (HON)
Ingersoll Rand PLC (IR)
Kimberly-Clark Corp. (KMB)
McDonald’s Corp. (MCD)
Under Armour (UA)
Sincerely,
Chris Versace
Editor, PowerTrend Brief
P.S.You can take advantage of a special promotional offer to become a subscriber to my new monthly investment newsletter, PowerTrend Profits. Our normal subscription price will be $249 a year but my publisher is offering a pre-publication, introductory price of only $77 through April 13. After that date, the introductory price will increase! My first issue will come out toward the end of April, so I invite you to become a founding subscriber by signing up today.
