GWM New America Folio Position Low Down: Eastman Chemical Co (EMN)

Eastman is a global specialty chemicals company.

Eastman is a global specialty chemicals company that produces a broad range of products found in items people use every day. With a portfolio of specialty businesses, Eastman works with customers to deliver innovative products and solutions while maintaining a commitment to safety and sustainability. Its market-driven approaches take advantage of world-class technology platforms and leading positions in attractive end-markets such as transportation, building and construction, and consumables. Eastman focuses on creating consistent, superior value for all stakeholders.

Market in Confirmed Uptrend

As a globally diverse company, Eastman serves customers in approximately 100 countries and had 2011 pro forma combined revenues, giving effect to the Solutia acquisition, of approximately $9.3 billion. The company is headquartered in Kingsport, Tennessee, USA and employs approximately 13,500 people around the world. For more information, visitwww.eastman.com.

GWM Core Equity Folio Position Low Down: Salesforce.com (CRM)

Salesforce.com Valuation Could Grow To $50 Billion

By Pete Barlas, Investor's Business Daily
 Posted 12/07/2012 02:57 PM ET

Confirmed Uptrend

Salesforce.com's (CRM) market valuation could jump to $50 billion in four years, from $22.2 billion now, as the company continues to cash in on its software-as-a-service business model.
SaaS lets companies pay for software on a monthly basis rather than paying costly upfront licensing fees. And the software is on the Internet "cloud," where enterprises can access it as needed.

Market Direction Model
Bullish

That's the conclusion of a report released Friday by Daniel Ives, an analyst for FBR Capital Markets. Ives also reiterated his outperform rating on Salesforce, the leading provider of customer relationship management software.

The company's lead in SaaS CRM software and its position in the cloud will likely help it grow as much as rivals Oracle (ORCL) and Microsoft (MSFT) did in the 1990s, says Ives.
"We believe Salesforce.com will join Microsoft and Oracle in being the only software companies to grow revenue from $3 billion to $8 billion in four years," he wrote. "This would place Salesforce.com in the elite $8 billion software revenue club (Microsoft, Oracle and SAP (SAP) — although it took SAP roughly seven years to make the bridge from $3 billion to $8 billion). We believe doing this will drive significant share price appreciation, similar to that experienced by Microsoft and Oracle."

New America Folio Position Low Down: Celgene (CELG)

Celgene (CELG)

Celgene develops cancer and immune-inflammatory related drugs. With a market cap of $33.5 billion, it's among the most valuable companies in Investor's Business Daily's 234-stock Medical-Biomedical/Biotech group. 

On Nov. 9 Celgene announced positive results from an early-stage study of its new Abraxane drug to treat pancreatic cancer.

The biotech's Earnings Per Share (EPS)  jumped 26% last quarter to $1.29. It's posted double-digit profit growth every quarter for more than four years.

New America Folio - Position News Item

Michael Kors (KORS) surged 4% before the start of regular trading. Goldman Sachs resumed coverage of the Hong Kong-based fashion house, placing the stock on its Conviction Buy list. The report saw Kors as able to maintain combined annual sales growth of 35-40% over the next four years, with potential to seize 25% of North America's high-end handbag and accessories market.

Read More At IBD: http://news.investors.com/investing-markets-update/121112-636581-futures-point-to-higher-open-tuesday.htm#ixzz2ElyCR9wg

Market Anomaly in Progress

So Goes Apple - So Goes the Market???

The "So Goes Apple - So Goes the Market" link is now broken. A market anomaly is currently taking place.

Apple's upside breakout has failed. Last week Apple fell more than 6% in a single day. This represents more than 4 times its historic volatility, an anomaly for sure. Apple's overall decline from its peak was roughly 25%.

So why didn't the market fall as well? It is not just Apple that declined quickly and sharply, but a lot of the recent high quality market leaders as well, including some stocks we held. Still,  most of the major indexes remain unshaken. I was baffled by this strange market behavior. I really needed to get my head around this.

Bullish

As you know I try to keep up to date by reviewing blog posts from the circle of trusted market analysts I have come to respect. I'll credit Pascal Willain, author and creator of the Effective Volume web-site, with giving me insight into the Apple/Stock market conundrum  Pascal is a tireless market analyst and very smart to boot. In a nut-shell, this is how he explains last week's market behavior.

Apple represents about 17% of the Nasdaq Index and about 5% of the S&P 500. It is the most widely held stock in the world. Money is moving out of Apple in a big way, but it is not leaving the market. The proceeds from the sale of Apple stock are finding their way into the dogs of the market, i.e., Hewlett Packard. So while Apple is being driven down, stocks like HP are being driven up; thus, the market averages are not declining. The trading activity in Apple is 5 time the norm.

Apple / HP

 Relative Strength

Comparison Chart

Bullish

Exacerbating the turmoil is the fact that the president seems unshakable in his determination to raise taxes on the so called rich. As a consequence, companies are paying out special large one-time dividends and investors are selling their winners to take advantage of the current lower capital gains tax rate.

I do not plan on chasing the money going into sub-par companies the likes of HP. Meg Whitman has stated that it will take at least 5 years to turn the company around, dead money.

Even though we were beat up a little lately, I think we need to remain optimistic. Politicians appear to be playing a game of chicken as they comment before the cameras, but the market believes that progress is being made behind the scenes.

When the Fiscal Cliff issues are fixed to some extent I would expect a very meaningful rally in the market. We want to be there when that happens.

Seasonality - Market Sweet Spot

Mark Twain, was quoted as saying:

 "History does not repeat itself, but it does rhyme."


If history is our guide, we are, from a seasonal perspective, in the sweet spot for the markets. 

Since 1950, 94% of the year's average gain, a little over 8%, could have been obtained between October and April.

Even with the recent market correction, we remain in a cyclical bull market and could make a new high in the months ahead. That being said, increased market volatility should be expected as politicians begin debating a resolution to the Fiscal Cliff.

I will be publishing  The Gerritz Letter on a quarterly basis from now on. I will keep you up to date via my blog, Gerritz InSights, as usual, but a little less frequently; I want to take the focus off the short term, in favor of taking a longer term perspective.

I think we can capture better returns by being willing to endure a bit more volatility. The key is to carefully select investment positions that have the strongest fundamentals, i.e., strong earnings growth and relative strength in the top ranked industry groups (ERG). The winners will ultimately get rewarded.

High frequency trading coupled with market moving news events have resulted in an environment were share prices move extremely fast; this is not your father's market. 

I have the tools to identify the best investment candidates as well as a support network comprised of brilliant market analysts and individual investors that have a real passion for the markets. 

The Daily Snapshot and the GWM Market Direction Model provide us information about the condition of the market. I think they are effective at demonstrating the ebb and flow of fear and greed in the market. If you follow these very visual portrayals of the evolution of the markets over time, you get a good sense of the rhythm of the markets. Market fluxuations are normal and should not be of concern; it is at the extremes in valuation however that warrant our attention. This is the point where investors gain or loose the most money.

Ian Woodward, HGSI analyst and group mentor, provides us with this important graphic depicting the emotions of investors during evolving market cycles.

(Click on charts for easier viewing.)

(Then click the large white X in the upper right corner to return to the blog)

Market corrections should be viewed as opportunities to load up the boat.
They are also the most difficult time to invest because
we are naturally most fearful. Fight the fear.

Warren Buffet once said something like:

"Be fearful when others are greedy and be greedy when others are fearful."

Market Comment 11 23 2012

Market Snapshot

63% (green area) of the stocks in the S&P 1500 Index

are now above the mid-point of the Bollinger Bands.

This is a positive.

Chart View

S&P 1500

We had two big up days this week.

Market Direction Model

Another strong day helps move us up out of the doldrums. 

I hope all of you had a nice Thanksgiving Day.  I personally love this time of year. I already have my Xmas wish list prepared.

All I want for Christmas is a Santa Claus Rally.

Addendum (Saturday Morning):

Friday was an abbreviated day with an early close. Even though we had a very strong day I was unclear as to if it qualified as an official Follow-Through-Day. Well , Investor's Business Daily confirmed that it was, in fact, a Follow-Through-Day and has changed the market status to "Market in a Confirmed Uptrend." 

"While not all Follow-Through-Days result in a sustainable rally, all sustainable rallies start with a Follow-Through-Day."

Our indicators really worked superbly this fall, helping us minimize the damage from the sizable correction that began on September 15th.  I turned cautiously optimistic Friday, a week ago, and began adding new equity positions. We are nearly fulling invested now in the right kind of stocks, high growth stock leaders.

Core Equity Folio Holdings

New America Folio Holdings

- Here Comes Santa Claus - Here Comes Santa Claus -


This blog post does not constitute an offer of investment advice. This blog is only provided for educational purposes. Please read the Important Blog Disclosure posted in the right channel bar.