Top Of The Morning

Client Talking Points

The Low Down

1466-1478 is our risk range for the S&P 500 today. There is plenty of opportunity here to make some sales and take some profits. Buying tops isn’t cool, because that’s when you get smoked and get a margin call from your broker. It’s important to manage the risk and the range of your trades because despite what the Federal Reserve is capable of, the market doesn’t just go up and to the right all the time. Our S&P Sector Model isn’t "perfectly bullish" as it has been recently and combined with yesterday’s close (the Russell 2000 didn’t make another new all-time high), it’s important to realize that the market can get nervous and dive lower. Proceed with caution out there today. 

VIX Tricks

The VIX has been getting hammered nearly every day over the past few weeks as the stock market rose towards infinity and beyond (Sorry, Buzz). We’ll be keeping an eye on it since the VIX signaled immediate-term TRADE oversold at 13.16. When the VIX is at levels this low, there's plenty of risk for a move to the downside in equities.

Asset Allocation

CASH 52% US EQUITIES 15%
INTL EQUITIES 15% COMMODITIES 0%
FIXED INCOME 0% INTL CURRENCIES 18%

Top Long Ideas

Company Ticker Sector Duration
ASCA

We believe ASCA will receive a higher bid from another gaming competitor. Our valuation puts ASCA’s worth closer to $40.

ADM

ADM has significantly lagged the overall market in 2012 over concerns that weakness in the company’s bioproducts (ethanol) and merchandise and handling segment will persist. Ethanol margins suffered from higher corn costs, as well as weak domestic demand and low capacity utilization across the industry. Merchandising and handling results were at the mercy of a smaller U.S. corn harvest. Both segments could be in a position to rebound as we move into 2013 and a new crop goes into the ground. With corn prices remaining at elevated levels, the incentive to plant corn certainly exists, and we expect that we will see corn planted fencepost to fencepost.

HOLX

HOLX remains one of our favorite longer-term fundamental growth companies given growing penetration of its 3D Tomo platform and high leverage to the 2014 Insurance Expansion from the Affordable Care Act.

Three for the Road

TWEET OF THE DAY

“Mantei T'eo will be confessing to Oprah in less than a month ...” -@nickragone2

QUOTE OF THE DAY

“Victory goes to the player who makes the next-to-last mistake.” -Grigorievitch Tartakower

STAT OF THE DAY

Jobless claims drop to five-year low: Initial claims for state unemployment benefits fell 37,000 to a seasonally adjusted 335,000.