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Hottest Deals of the Week

 

Sterling Weekly for February 13th, 2006

 

I am a little pressed for time this week, but I wanted to make a couple of comments on a few items I felt were worth paying attention to. With respects to the overall market; I continue to see reason to believe that the recent activity is anything more than a normal round of profit taking following a strong move upwards in early January.

Second, the Treasury auctioned off 30 Year Long Bonds for the 1st time in 4 years (I thought it was 8, but I stand corrected.) last week. From looking at the chart of the CBOE 30-Year Treasury Yield Index 'TYX' it shows the type of movement one would expect to see as demand was strong for this bond partially due to what I believe is its desirability to those who have long term liabilities to manage. My comments on the 30-Year Long Bond from last week can be found (here). I'll revisit this issue again in a few weeks when I think things have settled into a clearer picture to analyze.

The Dow Jones Industrial Average (the Dow) is designed to reflect the overall economy, which at the time of its creation was much more involved in manufacturing than it is today. However the Dow has been periodically updated to reflect the changes in the economy. The Dow Jones Transportation Index (the Transports) is designed to reflect the industry of transporting goods and services throughout the economy. Pretty basic concepts. The Dow is the most accurate predictor of where and how the economy will be performing approximately 6 months from now. The basic "Dow Theory" holds that a strong economy will also require the shipment of those goods and services, hence any sustainable move higher in the Dow and growth in the US economy will be confirmed by the same movement to new highs by the Transports. Below I have posted a chart on the Dow and a chart on the Transports. The trend on both has clearly been higher, and they both have recently set multi-year highs. I do not see any reason to doubt the strength in the US economy or the intermediate to long term direction of the market.

 
 


Sterling Calendars for the Week of February 13th, 2006
Economic Calendar
Date Est. Time Release For

Briefing.com

Consensus Prior
2/14 8:30am Retail Sales Jan 1.0% 0.8% 0.7%
2/14 8;30am Retail Sales-ex Auto Jan 0.8% 0.8% 0.2%
2/14 10:00am Business Inventories Dec. 0.6% 0.3% 0.5%
2/15 8:30am NY Empire Index Feb 18.0 18.0 20.1
2/15 9:00am Net Foreign Purchases Dec N/A N/A $89.1B
2/15 9:15am Capacity Utilization Jan 80.7% 80.8% 80.7%
2/15 9:15am Industrial Production Jan 0.2% 0.2% 0.6%
2/15 10:30am Crude Inventories 02/10 N/A N/A (318K)
2/16 8:30am Building Permits Jan 2,060k 2,062k 2,075k
2/16 8:30am Export Prices ex-ag Jan N/A N/A 0.1%
2/16 8:30am Housing Starts Jan 2,040k 2,005k 1,933k
2/16 8:30am Import Prices ex-oil Jan N/A N/A 0.0%
2/16 8:30am Initial Claims 02/11 280k N/A 277k
2/16 12:00pm Philadelphia Fed Feb 9.0 10.0 3.3
2/17 8:30am Core PPI Jan 0.3% 0.2% 0.1%
2/17 8:30am PPI Jan 0.1% 0.2% 0.9%
2/17 9:50am Mich Sentiment-Prel. Feb 92.5% 92.0% 91.2%

  Misc. Calendar
Date: Comments:
2/13 Cendant Corp. 'CD' reports earnings at 4:00pm. Est. $0.23/share.
2/13 Glamis Gold 'GLG' reports earnings before the open. Est. $0.10/share.
2/13 Harmony Gold 'HMY' reports earnings at 1:00pm Est. N/A
2/14 Abercrombie & Fitch 'ANF' reports earnings after the close. Est. $1.78
2/14

Cephalon, Inc. 'CEPH' reports earnings after the close. Est. $0.78

2/14 Deer & Co. 'DE' reports earnings before the open. Est. $0.83
2/14 Marsh & McLennan 'MMC' reports earnings before the open. Est. $0.31
2/14 Waste Management 'WMI' reports earnings before the open. Est. $0.40
2/15 Biogen 'BIIB' reports earnings after the close. Est. $0.48
2/15 Ceridian 'CEN' reports earnings before the open. Est. $0.25
2/15 Hewlett Packard 'HPQ' reports earnings. Time N/A. Est. $0.44
2/16 Baker Hughes 'BHI' reports earnings before the open. Time N/A
2/16 Cabot Oil & Gas 'COG' reports earnings after the close. Est. $1.11
2/16 Dell, Inc. 'DELL' reports earnings after the close. Est. $0.41
2/16

JCP Penny 'JCP' reports earnings. Time N/A. Est. $1.63

2/16 Lowes Corp. 'LTR' reports earnings before the open. Est. $2.09
2/16 Nvidia Corp. 'NVDA' reports earnings. Time N/A. Est $0.49
2/16 Target Corp. 'TGT' reports earnings. Time N/A. Est. $1.05
2/16 XM Satellite Radio 'XMSR' reports earnings before the open. Est ($0.90)
2/17 Radio Shack 'RSH' reports earnings before the open. Est. $0.68
2/17 Sirius Satellite Radio 'SIRI' reports earnings before the open. Est. ($0.22)
2/17 Stifel Financial 'SF' reports earnings. Time N/A Est. N/A
  The full earnings calendar for this week can be found (here)

Prime Update:

Sterling Investment Services is an investment research and money management firm publishing the Prime Stock Newsletter. The Prime Stock Newsletter is a daily comprehensive newsletter that is useful for investors and traders alike. Whether you are looking for short term trading opportunities ranging from day trading to a couple of weeks or if you looking to acquire a long term portfolio at smart entry points. Subscriptions are $50/month. A Free 2 Week Trial is currently being offered.

Highlights from Recent editions of the Prime Stock Newsletter
Recommendation Date Entry Point Recent Close or Exit Price Profit* Note
Advanced Micro 'AMD' Nov. 7th $24.63 $37.46 January 12th intra-day high.

$12.835

 
Capital One 'COF' Dec. 19th $85.74 $89.14 January 11th intra-day high $3.40  
Gold Corp. 'GG'

Dec. 29th

$21.72 $25.29 $3.48 Should continue to move higher.
* The per share PROFIT is a theoretical calculation based upon the opening price the day the recommendation is published and the intra day high (or low for short sales) on the exit day. The exit day is determined based upon the application of our "Rules for Trading", the implementation of "stops" within our stated policy, and may not reflect the complete or full movement of the underlying recommendation.

Dow Jones Industrial Average (INDU)

Current Opinion: Closed @ 10,798.27 Last Signal: Called Lower with the close of 10,793.62 on February 3rd. Current Expectations: I am expecting the Dow Jones Industrial Average to move lower and test 10,667.39 on a closing basis.

The S&P 500

Current Opinion: Closed @ 1,265.02 Last Signal: Called Lower with the close of 1,264.03 on February 3rd. Current Expectation: I am expecting the S&P 500 to continue to move lower and test 1,248.29 on a closing basis.

The NASDAQ 100 (NDX)

Current Opinion: Closed @ 1,657.54 Last Signal: Called Lower with the close of 1,664.53 on February 3rd. Current Expectations: I am now expecting the NDX to continue to move lower and test 1,645.20 on a closing basis.

CBOE Ten Year Treasury Index (TNX)

Current Opinion: Closed @ 4.545% Last Signal: Called Higher after the close of trading on January 26th with a close of 4.523% Current Expectations: This index should move higher and test then 4.567% and then 4.657% on a closing basis. Note: I am not seeing a real clear signal on this index. It could easily go either way.

Disclaimer: The Sterling Investments series of newsletters is produced by Sterling Investment Services, Inc. All information used in the production has been obtained from sources believed to be reliable and accurate. Sterling Investment Services does not warrant or assume any liability for inaccuracy of the information used to produce our publications. To receive further information on these services please visit our web page at: www.sterlinginvestments.com If you would like to contact us our fax # is (404)-816-8830 Email address is: enelson@sterlinginvestments.com Sterling Investment Services may hold positions in the securities recommended or may be providing consulting services to the companies mentioned within this report.
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