Market Got You Down? Here Are Ten Good Reasons to Remain Optimistic

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(List compiled by Andrew Dominguez. Data sourced from Finviz and Fidelity.)

NB: This article is a summary of Mr. Fink’s newsletter. Andrew Dominguez’ comments and other additions to Mr. Fink’s “Ten reasons to be optimistic” are separated by parentheses.

Has the market madness given you the heebie-jeebies? Jim Fink of Investing Daily has ten assertions that might assuage your apprehensions (via The Stock Advisors).

First, corporate profits are strong as evidenced by estimates-beating 2nd quarter reports from 75% of reporting companies.

Second, stocks are relatively cheap. The average S&P 500 forward (2012) price-to-earnings ratio is at 11.7. 

Third, falling oil prices could be a boon to cash-strapped consumers, whose spending comprises 70% of the economy. (Economists call this “consumption”).

Fourth, Moody’s and Fitch, two of the three large ratings agencies, have maintained a perfect credit rating for the US government. (And falling US Treasury yields might indicate that investors have paid little attention to S&P’s unprecedented downgrade.)

Fifth, “Italy promised to balance its budget by 2013.” (Caveat: this author is skeptical about anything that Italian Premier Silvio Berlusconi promises.)

Sixth, the Fed might hint at a new round of bond purchases, aka QE3. (Fink gave these comments before the latestFed release, which made no mention of a new round of bond buying.)

Seventh, the downward revision to 0.4% of first quarter GDP had more to do with an accounting change for petroleum imports than anything else. Fundamentals (like consumption) were mostly unchanged. (This is bittersweet news, at best.)

Eighth, China growth appears to be remaining strong at 9% annual GDP growth. (In fact, any slowdown in the Chinese economy will be intentionally induced by its government in order to rein in inflation)

Ninth, July non-farm payrolls increased by 117,000, beating expectations. May and June payrolls were also recently revised upwards.

Lastly, “more people are voluntarily quitting their jobs, which only happens when they become confident they can find new jobs.”

“Bottom line: Investors need to appreciate the good things that are happening as well as the bad things. All it takes is to view the glass as half full, instead of half empty. Once they do, the market should rebound.”

Feeling better? Here is a list of some buoyant bets – stocks trading above their 20-day, 50-day, and 200-day simple moving averages with significant institutional buying. 

Big money managers think these rallying stocks will continue to perform well. Do you agree?

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List sorted by net shares bought by institutional investors as a percentage of the share float.

1. GNC Corp. (GNC): Drug Stores industry with a market cap of $2.42B. During the current quarter, institutional investors have bought 28.3M shares (net), which represents 52.17% of the 54.25M share float. Shares are trading 3.13% above their 20-day MA, 11.22% above their 50-day MA, and 17.08% above their 200-day MA.

2. Telvent Git S.A. (TLVT): Computer Based Systems industry with a market cap of $1.17B. During the current quarter, institutional investors have bought 1.5M shares (net), which represents 41.78% of the 3.59M share float. Shares are trading 0.02% above their 20-day MA, 0.37% above their 50-day MA, and 29.37% above their 200-day MA.

3. Merge Healthcare Incorporated. (MRGE): Healthcare Information Services industry with a market cap of $488.77M. During the current quarter, institutional investors have bought 3.4M shares (net), which represents 16.87% of the 20.16M share float. Shares are trading 9.77% above their 20-day MA, 11.66% above their 50-day MA, and 26.14% above their 200-day MA.

4. Mistras Group, Inc. (MG): Technical Services industry with a market cap of $438.41M. During the current quarter, institutional investors have bought 1.9M shares (net), which represents 13.12% of the 14.48M share float. Shares are trading 6.64% above their 20-day MA, 8.35% above their 50-day MA, and 17.18% above their 200-day MA.

5. Gold Resource Corp (GORO): Gold industry with a market cap of $1.38B. During the current quarter, institutional investors have bought 2.8M shares (net), which represents 8.77% of the 31.91M share float. Shares are trading 4.28% above their 20-day MA, 7.26% above their 50-day MA, and 4.33% above their 200-day MA.

6. El Paso Pipeline Partners, L.P. (EPB): Oil & Gas Pipelines industry with a market cap of $7.22B. During the current quarter, institutional investors have bought 9.2M shares (net), which represents 8.49% of the 108.30M share float. Shares are trading 0.89% above their 20-day MA, 2.76% above their 50-day MA, and 3.82% above their 200-day MA.

7. Duncan Energy Partners LP (DEP): Oil & Gas Pipelines industry with a market cap of $2.35B. During the current quarter, institutional investors have bought 1.8M shares (net), which represents 7.79% of the 23.10M share float. Shares are trading 0.87% above their 20-day MA, 1.63% above their 50-day MA, and 15.57% above their 200-day MA.

8. Jazz Pharmaceuticals, Inc. (JAZZ): Biotechnology industry with a market cap of $1.51B. During the current quarter, institutional investors have bought 1.4M shares (net), which represents 5.63% of the 24.88M share float. Shares are trading 0.95% above their 20-day MA, 12.43% above their 50-day MA, and 43.58% above their 200-day MA.

9. New Gold, Inc. (NGD): Nonmetallic Mineral Mining industry with a market cap of $4.28B. During the current quarter, institutional investors have bought 21.9M shares (net), which represents 5.02% of the 435.92M share float. Shares are trading 7.91% above their 20-day MA, 14.87% above their 50-day MA, and 20.76% above their 200-day MA.

10. Marchex, Inc. (MCHX): Marketing Services industry with a market cap of $401.33M. During the current quarter, institutional investors have bought 740.1K shares (net), which represents 4.42% of the 16.76M share float. Shares are trading 15.74% above their 20-day MA, 18.91% above their 50-day MA, and 25.38% above their 200-day MA.




The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks


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