Markets ended last week on a down note, with the Dow Jones dipping 0.43%, the S&P 500 falling 1.36% and the NASDAQ tumbling 2.92%. The MCSI Emerging Markets Index had an even tougher week, ending down 4.23%. Only three global stock markets among the 47 I track on a daily basis were up last week, with the best performer showing a 0.89% gain.
Despite this sea of red, two positions in your Bull Market Alert portfolio bucked the downturn: Alaska Air (ALK), which gained 2.49%, and ULTA Salon, Cosmetics & Fragrance, Inc. (ULTA), which added 1.15%.
You were stopped out of last week’s recommendation, Valeant Pharmaceuticals International (VRX), at a loss. A special thanks goes out to Hillary Clinton, whose new drug plan announcement — a transparent attempt to boost her flagging presidential campaign — cost investors in biotech and healthcare stocks tens of billions of dollars in a single week.
Although a bevy of sentiment indicators suggest that the market will bounce in Q4, I am a bit concerned about the short-term technical action of the market.
Although stocks started strongly on Friday, they reversed enough during the day to cause the Nasdaq and the S&P 500 to finish down. The Nasdaq booked a 1% loss after being up 1.1% just after opening. The S&P 500 held up better, trimming to less than 0.1%. That’s the kind of action typical of markets in correction.
The bottom line? This is one of those weeks where you are better off not putting more money at risk because the odds are now on the bears’ side.
With both Asian and European markets down overnight, I plan to be back with a new Bull Market Alert recommendation next week.
Portfolio Update
Alaska Air (ALK) gained 2.49% last week. Alaska Air and Icelandair are expecting to enjoy the mutual benefits of a codeshare agreement and frequent-flier partnership starting Nov. 1. This will allow the airlines to offer customers a seamless intra-carrier experience when flying on either airline, as well as the ability to offer easy access to destinations serviced by both airlines. This agreement is a win-win situation for both air carriers, as well as their passengers, and should provide a direct boost to ALK’s bottom line. The agreement is currently under review and awaiting government approval. ALK is a BUY.
ULTA Salon, Cosmetics & Fragrance, Inc. (ULTA) added 1.15%. Although ULTA isn’t expected to report earnings until Dec. 3, analysts have been busy trying to read the tea leaves and get a bead on expectations. Consensus estimates currently range from $1.03 earnings per share (EPS) to $1.24 EPS. Last year, ULTA posted $0.91 EPS in the same quarter, giving ULTA a potential 16% year-over-year growth rate, at the low end of the range. ULTA is a BUY.
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