For the first seven weeks or so of this year, the stock market cruised higher each and every week. I chalk that rise up to the "averted" fiscal cliff and a pretty good report card overall for corporate earnings. Not that the latest corporate earnings were great, mind you, but up to that point, it was a solid "B" grade in my view. In the last two weeks, however, the stock market shifted course into more challenging waters.
Much like you and me, it had to confront the reality of rising gas prices and the impact on our wallets. If you're like me, and I suspect in this case you are, paying $3.89 per gallon at the pump leaves less money for other things. What I find most amazing about this rising price for fuel is how the Federal Reserve claims it is not seeing inflationary pressures out there.
One would think that the more than 16% rocket-ship ride we've experienced in gas prices since the start of 2013 would have the Fed seeing something else. Well, the Federal Reserve may not be feeling it, but it's affecting the U.S. consumer. I know that because it has affected Walmart's (WMT) business to the point that the company issued a rare downbeat outlook. Walmart's just the latest company and it joins others, including Burger King (BKW), Kraft Foods (KRFT) and others in doing so.
Mix in expected cuts that will start to phase in as soon as the end of the week, given the sequestration, and it is a cocktail recipe that will slow the economy in the coming weeks.
Now, you're probably saying to yourself that this outlook sounds like last year, and the year before that, and the year before that.
If that's what you thought, you'd be right!
For a variety of reasons, for the last few years we've encountered what I have come to call the spring swoon. The economy slows, the stock market falls and you are wondering what to do next.
During the last few weeks in my investment newsletter, PowerTrend Profits, I've recommended trimming back some positions and booking some fat profits in the process. That action has left subscribers with ample cash that we can put to work in the coming weeks to generate even more profits in the months ahead.
Now you're probably wondering - did they sell everything?
We most certainly did not sell everything. That's because we've invested in a number of companies poised to benefit from PowerTrends during the long term. For example, our position in data center company Digital Realty Trust (DLR) shouldn't see any real slowdown in demand as a result of higher gas prices and sequestration. If anything, those factors could result in even stronger demand as consumers look to cut back from eating out or going to the movies by eating at home and streaming the newest films and TV shows on-demand.
That analysis is one example, and there are more than a handful of others, of the valuable insights that my newsletter provides to help subscribers profit.
It is easy to talk about profits you've already booked. While I could do that kind of bragging, I'm more inclined to be looking for new opportunities to share with my subscribers. In some respects, investing is similar to a shark in the ocean. In order for the shark to survive, it has to keep swimming forward.
The same principle holds for smart investors. You've got to keep looking for opportunities if the stock market is up, down or even sideways. The difference between regular investing and PowerTrends is that regular investing looks for good opportunities in a particular industry or sector.
PowerTrends, on the other hand, look for the best positioned companies across a number of industries that will deliver big profits during the coming months. At a minimum, I won't even touch a stock if it can't deliver at least 25% upside for my subscribers.
You can sit there and wonder what to do next as the latest round of market turbulence hits, or you can join me in using PowerTrends to navigate these storm clouds and make some big money in the process.
To read my e-letter from last week, click here. I also invite you to comment about my column in the space provided below.
Sincerely,
Chris Versace
Editor, PowerTrend Brief
