Today was a wild day in the market even though the major indexes didn't move much. The big news of the day was Fed Chairman Ben Bernanke's speech to the Boston Fed. Bernanke claimed that even though the unemployment rate rose to 5.5% in May from 5% the previous month, "the risk of a substantial downturn (in the economy) has lessened". He noted that "rising energy prices have added to the upside risk for inflation" but maintained that "the seepage of rising raw material costs to other prices has been limited to this point." I have to wonder what this man is smoking if he really believes this. Our economy is definitely getting weaker and inflation is already a problem. The dollar is near all-time lows against many currencies and oil is not far off of its all-time high. I believe Bernanke's speech was an attempt to stop both of those trends. For today, it worked as the dollar strengthened and oil weakened. The question I have to ask of myself is whether I think these trends will continue. The answer is, only in the short-term. We've seen sharp corrections in commodities stocks before, only to see them come roaring back a few days later. I believe that's what we'll see again this time. However, I have to always be mindful of the fact that I could be wrong and I must have a strategy in mind for each of the stocks in my portfolio. As I have said before, I would rather take a gain in a stock when the outlook becomes uncertain as opposed to watching all of my gains melt away.
News on Specific holdings:
Coca-Cola (KO) $58.01 was the biggest gainer in the portfolio today as it was upgraded because, of all things, the weak dollar.
BE Aerospace (BEAV) $27.96 was easily the worst performer in the group today as it was down over 6%. I don't see any news to cause this decline so I'll just chalk it up to a little profit taking after an 11% rise yesterday.
US Steel (X) $176.41 was also down a lot on the day with a 4% decline. I don't see any news on it either, so I am guessing Bernanke's speech gave people an excuse to sell since this stock has been on a tear over the last six months. The only thing that concerns me is that the stock has tried to break through the $185 level twice now and it has failed to do so. It looks like it has good support in the lower 170's. If it trades down into the 160's, it may fall a little more before it finds more support.
I added to my Altria (MO) $21.13 position today at $21.05 as the stock sold off again. Luckily, the purchase was just in time to qualify for the 29 cent dividend to be paid early next month.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment