Week of Oct 12,2009

From the Desk of Stephen Pizzuti

Founder and developer of Evaluvest and Author of PizzutiPower

Investors ask me why I don’t make comments more frequently. My answer usually consists of multitude of reasons (excuses) as to why my comments are sporadic. Truth be told is I simply don’t make comments if I don’t have anything new to say that alters my prior position on the markets. Peer pressure is taking its toll on me so here we go.

The first thing I would like everyone to do is read my August 10th post and understand that my market position is relatively unchanged. For example, the most recent pullback was an opportunity for shorts to cover and for “The late to the party buyers”. I also stated that we should get to 1100-1150 on the S&P. I stated prior that I believe the obvious V- down move in all the indexes during the October-November drop creates upside opportunity due to the lack of resistance on the way up. We should continue this wall of worry move and test these levels. I still believe this is possible. Then we need to re-evaluate. If earnings are better then expected does that mean the wall of worry may fall along with the markets? That is the next question to ponder. I certainly don’t like the fact that the “Media Box” has decided to start counting down to market 10,000. There is no question we are getting extended with regards to individual stocks and their sectors.

Remember, it’s a market of stock. Not a Stock market. Why is this important to note? As I screened through hundreds of top “Alpha” stock candidate from the EvaluvestP4 system, most are well above their 21-day and/or their 50-Day M/A. I would have to buy inferior Alpha candidates to find more technically constructive stocks. This makes me extremely uncomfortable.
To summarize, if the markets have limited short-term upside and individual stocks are short-term extended taking new positions with the potential for significant upside is questionable. Why? Because we know that roughly 80-85% of all stocks track the market in the short-term. This puts too much risk in the risk vs’s reward investment scenario to establish new positions. Conversely, if you believe that the DOW at 10,300 and the S&P at 1150 is enough market upside then go for it.

Please note that I will be posting some stock and sector ideas that I am working on if the markets behave over the next few days. Hint, Hint-Energy and related stocks.
Thank you for your interest in Evaluvest

Stephen Pizzuti

Here are some quick comments on the markets and my short-term view of the trend. The trend has certainly been our friend. I predicted we would get to 1000 on the S&P, while others were talking double dip. We have been going on the premise that the markets have been too oversold and that we should at least get to normalize levels. We need to re-evaluate this position.
As we all know anticipating the future is never easy and will never be a certainty. As I review the charts and Evaluvest’s market indicator I can’t help but think that we should have a short-term pullback to around 960 on the S&P and 9100 on the Dow. The NASDAQ should pullback to around 1900. My view is supported by the fact that the earnings season is passing and there is no real short-term catalyst to push us straight up to the next technical level. The majority of the qualities individual stocks are extended on the short-term basis.
We need to digest this move for the next few days, but don’t be short this market. Whether we get this consolidation or not I see a move to 1100-1150 on the S&P as a high probability based on the fact that there was no real selling on the S&P from 1150 down to 1000. This move down the first week in August was so swift, dropping in days with fear as the only catalyst to support such a drastic move. So, based on being little resistance to the upside after a small pullback the potential for a move to 1100-1150 on the S&P is very possible. The short sellers have been taking it in the shorts and the sideliners still have not been investing. Both are worried they may be missing a major portion of the returns for 09. A pullback will give the short sellers a chance to buy back positions and give the sideline investors a chance to get into the markets. This limits our pullback with buyers looking for an opportunity to buy. So, I see just a small pullback here.
Regarding individual stocks there are a lot of issues that are short-term extended. If you have profitable stocks that are extended beyond 10-15 % of their last short-term base, take a profit. If you are looking to go long be patient a day or two to see if we can buy at a discount from today’s levels.
Have a great week. Follow the rules and stay out of trouble. Stay tuned for the P4 challenge being launched Sept 1.Take the challenge if you dare.

StephenPizzuti

Week of July 13

Critical days ahead

I wrote last month about the potential to go 1000 on the S&P being cautiously optimistic. Well, we didn’t quite make it as the talking heads on Wall Street have convinced the markets that we have formed a short-term head and shoulders bearish technical formation. This technical breakdown could force the S&P to correct down to form a longer-term reverse head and shoulders formation at around 810 on the S&P. A retest down to these levels would be an extremely bullish sign for a longer-term bull market move.
This morning may provide short-term upside as financial stocks are anticipated to have positive earnings. Markets have sold off recently as we approached this critical earnings season. It is possible we may rally if earning proves to be better then anticipated. In this short-term oversold condition we would normally attempt a rally, but we are lacking strong technical support at current levels. My concern is that the talking heads of Wall Street may try to talk us down to the 810-ish levels.
Leading sectors have been semiconductor’s, communications equipment, Metals and Miners, Oil and gas Exploration, and Computer storage. I still like some of these names. Sectors that seem to be powering up are Utilities, Asset management, broadcasting, IT consulting, personal products, Electronic Manufacturers, and Coal and Consumables.

Some advise on what to look for in your stock selection.

Look for stocks that are actually going up or holding up and not going down in price with the markets. This tends to identify superior stock and sectors with superior relative strength.

Here are some ideas for consideration:

IT Consulting-ACN, CTSH,
Computer Storage-EMC, QLGC
Utilities-PNM, SCG, NFG
Food Retailers-WFMI
Building products-AMN
Reinsurance-PTP
Commercial Printing-DLX
Construction and Engineering-NWPX
Application Software-SLM
Internet Software-ELNK
Coal and Consumables-WLT

Any question regarding my commentary please give us a call at 888-592-7575.
Ask about our NEW P4 INVESTOR CHALLENGE when you call.

Stephen Pizzuti-Founder of Evaluvest and Author of Pizzuti Power.

Week Of June 1 st

Optimistic on Markets still …cautiously optimistic
The market continues to remain strong over the past few weeks as consumer sentiment had the 4th largest percent increase in the 32 year history of the survey. This 54.9 number indicates the highest reading in 8 months and may lead to consumers loosening their grip on their wallet. While consumer confidence is still weak by historic standards this number may indicate a blow off bottom of bearish sentiment. This may also lend itself to the notion that the markets are more tied to people’s emotions then the reality of the events taking place. With that being said I wrote back on 5/4 that I was a short-term bull with a potential for a short-term pullback. We got the rally and we got the small pullback. The question now is where we go from here.
We are going up on the averages out of the gate this morning with the S&P breaking above the 200-day moving average for the first time since last year. I will remain bullish if we close above the 200 day and above 928 on the S&P. If this happens we should have clear sailing up to 1000 on the S&P. I suspect that the short interest investors and the sideline money will need to cover their shorts and get off the sidelines for fear that they will get burned or miss a big upside move. This should get us to that 1000 mark I indicated. The warning label for today would read-If the markets reverse intraday today to down or unchanged with big volume on the reversal I will take the position that it may be a key reversal day and the upside move has ended in the short-term. Yes- today’s closing action is important.

Individual ideas on stocks and sectors are as such.

Let’s start with the fact that I talked about technology stock and specialty retailers showing signs of life. On that note you would of done very well in select retailers. You just saw Cisco be added to the DOW Jones average. You have just seen MSFT and INTC break above their 200-day average and more specific the semiconductors earning and technical power both seem to be improving still. Forget what the Talking heads on Wall Street are saying. The numbers and data don’t lie.
While we are still optimistic we urge you to keep your stops in place and stay disciplined in regards to buying stocks close to the 20-day and 50-day moving averages. Please do not chase stocks and buy any stocks that are extended more then 5% to 7 % above the 50-day moving average or 3% to 4% above the 21-day moving average. (Please refer to my book. If you do not have a copy I will send you a complimentary copy).

Here are some ideas to consider that are not extended. After today they may have rallied so you may have to wait for a pullback.

Pharma’s-SEPR
Application software- MSCS
Retail Auto-PAG
Integrated Telecom-CTL
Data Processing-PAY
System Software-ORCL
Restaurants-THI
Reinsurance-ENH
Apparel- WRC
Semi’s-POWI-XLNX-FCS
Chemicals-OMG
Metals and glass container-OI
Industrial Conglomerates – CSL

Please give us a call if you have any questions. If you are not using our stock analysis software and would like to contact us at 888-592-7575
Stephen Pizzuti-Founder of Evaluvest LLC and Author of Pizzuti Power

Joe Ondris 407 389 8511 or Jason Garcia 407 389 8523

Stock Market Analysis – Week of 5/4/2009

The fun has just begun. Those people who have understood that the world wasn’t coming to an end, realized we were overdue for a dead-cat bounce, and acted on my previous commentary are now making money.
The fun I am referring to is the constant misdirection coming from the the Wall Street Pros and other talking heads we hear each day. These experts can’t seem to decide whether to be bullish or bearish. Ultimately for every bearish expert you can find a bullish expert that contradicts him/her. One thing that does stand clear is Doom and Gloomers are still looking for a retest of March lows – yikes. What to do, what to do? .
Basic Market cons – the basic argument for a pullback is that we are trading at high multiples to 2010 earnings P/E’s. We have taken a huge move off the lows. All the major Indices and many of the critical stocks and sectors are approaching their 200-day moving averages.
Basic Market pros- we are still so ridiculously over-sold that none of the above cons really matter. Do we have any ideas about 2010 earnings? The answer is no. The liquidity pumped into the financial markets along with investment monies waiting on the sidelines may attract buyers based on fear that they will be missing the potential big move up. Shorts have been buying stocks back and are getting increasingly nervous. Large Cap Tech has been starting to show signs of life off the bottoms. We seem to be seeing a lot of individual stocks and ETF’s forming their own versions of reverse head and shoulders bottoms. This would be opposite what we saw forming through June-August of 2008. Take a look at some chart data back then.
Conclusion- Only buy stocks that are still close to their short-term moving averages like the 21-day or 50- day, respectively. Do not buy stocks that are extended beyond 5% of the 50 day. Definitely do not buy stocks close to their 200-day moving averages unless it is sitting on top of it. Lets take the attitude that we will have trouble breaking up through the 200 day moving averages on the major Indexes using the S&P as our focus index. Yesterday’s action seems to indicate that we should hit the 200 day on the S&P as it appeared to puncture through some short-term resistance. We get a follow through today to the upside lets expect a to hit the 200 day moving average on the S&P. Then pullback. If we fail today I will reconsider my position and assume we will take a breather into next week.
I’m short on time regarding posting Individual stocks for review so please give us a call at 1-888-592-7575.

Steve Pizzuti