PowerTrend Brief: Looking For Safety & Security among the Earnings Maelstrom

Chris Versace

Chris Versace is a financial columnist and equity analyst with more than 20 years of experience in the investment industry.

One might think that after last week’s torrent of more than 1,100 companies reporting quarterly earnings, things might get a little easier this week.

I’m afraid not.

While only 950 companies will be reporting their quarterly results this week, that modest reprieve will be offset by a jump in economic data. Already today, we’ve learned that the personal saving rate remained below 3% for the third consecutive month. In the coming days, we’ll see a number of indicators hit the tape on the health of the domestic economy — construction spending, factory orders and the health of the manufacturing economy. Also coming our way will be the April employment report from the Labor Department, as well as some key data for China and the euro zone.

To top it all off, it may seem like we’re in a little bit of a time warp because of market closures in Japan (today) and China, which has its markets closed until Thursday in observance of Labour Day holidays. Later this week, there will be two big meetings — the European Central Bank (ECB) and U.S. Federal Reserve. Expectations are running high that the ECB will cut its main interest rate at its monthly policy meeting on Thursday. A Reuters poll of 76 economists showed a narrow majority of 43 expected a rate cut of 25 basis points, taking the ECB’s refinancing rate to a record low of 0.50 percent.

In other words, we are in for another extremely busy week.

There are several common problems investors face when encountering the data maelstrom that occurred last week and will be again this week. The typical investor becomes so focused on the sheer number of earnings reports that he or she tends to ignore other important drivers of how to invest. You may know the saying, typical behavior only gets you typical results. What I and subscribers to both PowerTrend Profits and ETF PowerTrader are after is big profits with modest risk. In other words, we like to sleep each night of the week. That caution usually means that while the herd is focused on a, b and c, we’re busy looking at d.

Let me give you an example.

For the last two weeks, we’ve been reminded of the growing threat of cyber attacks as the stories over the Associated Press’s Twitter account being hijacked caused a flash crash in the stock market last week. Daily deal site Living Social was compromised, and that attack may have compromised the personal data of more than 50 million of its customers.

Those are just two of the latest cyber attacks. Believe me, those are far from the only two. Remember, last September the websites of Bank of America (BAC), JPMorgan Chase (JPM), Wells Fargo (WFC), U.S. Bank (USB) and PNC Bank were the victims of cyber attacks. Simply put, these kinds of attacks are not only coming faster, but more frequently as well.

Most people will see the news on cyber attacks and think about how awful they are. They truly are. But it is the pain point — losing your data, having your identity stolen, who knows what happens to your credit report and more — that will spur demand for cyber security solutions.

If you were too busy watching the tick and tack of the tape, you would have missed all of those developments, which only confirm one of the key aspects of my Safety & Security PowerTrend. I’ve seen this opportunity before when companies have mandatory compliance data ahead of themselves — it’s a barn burner for demand, not to mention profits for those companies that have the critical solutions. In the coming days, I’ll be sharing what I’ve turned up with my subscribers to help them profit from this potentially painful situation. I hope you’ll join us.

To read my e-letter from last week, please click here. I also invite you to comment about my column in the space provided below.

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