MARKET-ALERT – Rumblings Up, Down, and Around Wall Street – Issue #418 dated January 29, 2017 – with Raymond L. Dirks of RAYDIRKS Research and his team of securities analysts and money managers, along with the internationally-followed Web Sites, www.CorporateProfile.com and www.CPreports.com, where Fashion meets Finance, and where Stocks meet Blonds.
Well, Well, Well …The Dow finally broke through the much anticipated 20,000 level last week amid a broad-based stock market rally in the United States last week that carried the major indexes to all-time closing highs on moderate trading.
Rumblings’ Favorite Stocks for 2017 also did well last week – led by Apple, Inc (AAPL), Aflac (AFL), Hertz (HTZ), and Hartford Financial Services among the largest companies, and led by Fusion (FSNN) among the smaller companies. We’ll discuss these Rumblings’ Favorites later in this article, but first, let’s quote from “The Trader” column in tomorrow’s Barron’s, the Dow Jones Business and Financial Weekly, where the headline reads: “Market Breaks 20,000 and Asks, What’s Next?”
The column goes on to say : “Anything worth having is worth waiting for…but we sure didn’t have to wait too long for Dow 20,000.”
Sure , it seems like an interminable amount of time since we at Barron’s urged investors to get ready for it in on December 10. But it took just 42 trading days to go from 19,000 to 20,000, second only to the Dow’s 24-day sprint from 10,000 to 11,000. Still, we’re happy to say finally, even if “finally is probably the wrong adverb, as Keith Lerner, chief market strategist at SunTrust Advisory Sernices, put it to clients last week.
All told, the Dow Jones Industrial Average gained 267 points, or 1.3%, to 20,084 this past week, while the Standard & Poor’s index rose 1%, to 2,295, and the Nasdaq Composite climbed 1.9%, to 5,551.
We’re hesitant to make too big a deal about Dow 20,000. It is, after all, nothing more than a round number, one that is important thanks to an accident of history, namely, that we humans developed a base-10 number system. After the 6.4% rally following President Donald Trump’s election win, the S&P 500 stalled, raising concerns that it would repeat last January’s trouble.
The rally has alleviated these concerns for now. The possibility of loss regulation and lower taxes has spurred talk of animal spirits, and we can’t help thinking that having Dow 20,000 splashed on the cover of newspapers and magazines can only help in that regard.
But it’s also a strange time for the market to rally, if only because so little has been resolved. Last week brought talk of tariffs but also deregulation, and the ultimate mix is still largely unknown. Bank of America Merrill Lynch analyst Nitin Saksena notes that the Economic Uncertainty Policy Index – a measure of uncertainty as reflected in the media – has been rising, even as the CBOE volatility index, which can be seen as a measure of market uncertainty, remains below 11. In the past, the metrics have moved in sync, but now the gap between them is as wide as it has ever been, he says.
But unlike the uncertainty that comes from being able to see everything that could go wrong and little that could go right – one could argue that has been the case for much of the current bull market – – this time the uncertainty could go either way. Investors also tend to sit on their hands when they can’t pinpoint exactly how to price the new risks. “It isn’t necessarily bearish for investors,” Saksena says.
That doesn’t mean volatility can’t rear its ugly head – perhaps as soon as next week. Remember, the Federal Reserve meets next week, and that could rattle the markets, says Tony Dwyer, chief market strategist at Canaccord Genuity. He notes that everything that keeps the Fed on hold – deflation fears, risks to the global economy, and tepid government spending – have all reversed, and that means the central bankers could be surprisingly hawkish, even if they don’t necessarily raise rates. “The initial shock could be nasty,” Dwyer says.
The good news is that any sell off would be a buying opportunity…if one comes at all.”
Rumblings continues to think that despite the uncertainties that have arisen from the recent election of President Donald J. Trump, and some of the controversial statements coming from from Washington since he assumed office several days ago, the U.S. stock market will move up by between 10% and 25% in 2017. Interest rates are likely to remain comparatively low, in our opinion – therefore, we think investors will continue to favor common stocks over bonds.
We continue to suggest that investors do their due diligence, check with their investment advisers, and consider adding to their portfolios the shares of companies in Rumblings’ Favorite Stocks for 2017, including those mentioned near the beginning of this article – Apple, Inc., Aflac, Hertz, Hartford Financial Services, and Fusion .
We urge our Readers/Investors to look closely at Fusion (FSNN), a $125 million sales company that offers cloud services globally, and is enjoying rapid growth, yet is virtually unknown to investors. We think that FSNN should increase in price from $1.50 to a price of between $6.00 to $12.00 in 2017.
At these potential prices, Fusion would still be selling at a discount to the current prices of its two principal competitors – Ring Central (RNG) and 8×8 (EGHT), as measured by a key valuation ratio in the cloud services business – the ratio of current sales, or annualized sales, to market capitalization.
For more information, we suggest readers/investors go to the Yahoo.com website or go to the Web Site of Fusion (FSNN).
We suggest that readers/investors do their due diligence, check with their investment advisers, and then consider purchasing shares in one ore of Rumblings Favorite Stocks for 2017.
We also suggest that readers/investors place no more than 1% of the funds they invest in common stocks in the securities of any one company… It’s best to diversify !
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