It's becomimg painfully clear that oil prices will continue to march higher as the economy continues to gain momentum. As we approach the peak in the business and stock market cycle, demand for energy will follow suit. I do not see any relief in energy prices until the economy begins to contract. As gasoline prices continue to rise, more and more cash will be sucked out of consumers pockets, and this reduction in descretionary income will eventually result in lower retail sales.
We reiterate our opinion that investors should take profits in the Consumer Descretionary Sector now, and into the upcoming stock market rally. You may also want to take profits in the oil sector as demand peaks, but keep in mind that once the economy bottoms, we will once again overweight the Energy Sector.
In my February 11th journal, I mentioned the possibility of reducing our positions in our technology holdings. Slowly, our favorite tech stocks have begun to rally. One of our stocks, Hewlett Packard (HPQ), has been highlighted on the front covers of the most recent issues of Business Week and Fortune. An ALERT contrarian knows that important market tops and bottoms are usually signaled by the headlines of major publications.
In the February 21st issue of Business Week, the headline read, " Can Anyone Save HP?". In the February 7th issue of Fortune, the headline read "Why Carly's Big Bet is Failing". These headlines are important signals that a turnaround in the company's fortunes are just around the corner. Sure, we might have to wait 12-18 months, but 40% gain in the stock will be worth the wait. Carly Florina is out, and the company's directors want results. You can bet that the directors will get what they want.
Yesterday, Coca-Cola (KO) announced earnings that were better than analysts had expected. The company also announced that it would buy back $2 billion dollars in stock, and repatriate up to $6.1 billion in overseas earnings. Coke shares are up 3% this morning as the beverage giant posted a 30 percent rise in fourth quarter earnings. A week dollar and a lower tax rate helped KO boost its profits. I am confident that Coke will hit $50 sometime this year.
Finally, you are seeing the significants of being an ALERT investor, and the Investor Alert is here to guide you to a safe and profitible future.
