It's time to do some selling. Sorry for not posting comments the past few days. We had a hurricane Dennis come roaring through our area, and we were without power for about 3 days.
Today, I would like to sell 4 stocks. They are as follows: Monsanto (MON + 12% or 24% annualized), Johnson & Johnson (JNJ + 24.5%), Baxter International (BAX +24.5%), and Boston Scientific (BSX - 18.9%).
The selling of these 4 stocks leaves us with 16 stock positions, 1 preferred stock, 2 hedge mutual funds, and a boatload of cash. This is the exact position I want to be in as we enter the volatile summer and fall season. I want to keep a large cash hoard in a safe place to take advantage of any opportunities that should arise over the next few months.
The biggest rallies that we have witnessed over the last few weeks have been confined to sectors that have been the most heavily shorted. Short selling has been concentrated in mid and lower cap stocks, that's why the S&P 400 MidCap index and the S&P 600 Small Cap index are trading at all-time highs.
As we approach the July 15th seasonal turning point, we want to be a little more cautious. Technology continues to show positive action in the markets in the wake of short covering and the lack of bad news. The NASDAQ is in a seasonality is positive period that usually ends in mid-July and into August.
In recent economic news, the June unemployment rate dropped to 5% as the economy created 146,000 new jobs. I told you last month to expect an increase in the number of jobs during the summer months since many high school and college students are seeking employment. So don't let the job numbers fool you. We are more interested in real jobs, not seasonal employment.
Below is a calendar of economic releases this week. I am not as interested in the day to day or week to week releases of economic data as I am the 3,6,9, and 12 month trend. We want to focus on the direction the economy is headed more than weekly blips on the screen.
Economic Releases this Week:
1) Thursday, July 14:
June CPI and June Retail Sales are due out at 8:30 and expected to come in at 0.2% and 1.0% respectively.
2) Friday, July 15:
June PPI is due out at 8:30am and is expected to rise to 0.4% from a drop of -0.6%.
June Industrial Production is due out at 9:15 and is expected come in at 0.4% from 4% in May.
Options expiration- Triple witching
