MLR - PMP 3/16/15
Editorial note: Our members receive full daily PMP reports (Mon-Fri) while non-members receive weekly reports that exclude any actionable names.
Major averages closed down Friday on higher volume but managed to recover about half of the losses to close midbar. Oil resumed its downtrend as it is close to testing multi-year lows while the dollar continued to hit multi-year highs. A strong dollar negatively affects big cap international companies the most. Overnight China indicated that it may have to implement additional stimulus measures as it appears unlikely that the Chinese economy will meet its growth targets.
While the market is on edge about higher rates down the road due to a stronger economy, the Fed knows that the declining unemployment rate does not tell the full story, thus unusually low rates may be here to stay for quite a bit longer than expected. As Steve Forbes wrote: "The labor force participation rate has hovered at an all-time low for nearly a year. The last time this many Americans stopped looking for work was 1978. We must return to the kinds of free-market principles that create jobs, and stop relying on Big Government!"
Of course, low rates dont mean we cant get a correction of some magnitude so stay nimble.
Online takeout order provider GrubHub (GRUB) had a pocket pivot on Friday, but while earnings are skyrocketing and sales are strong, the company has yet to double from its IPO price. Normally, one wants to see a company having at least doubled from its IPO price. Hot companies often price at more than twice their IPO price. That is not to say GRUB cant work, but its weekly price chart shows some lethargy and likely indicates that it need some time to build a handle to a large cup formation it has formed since August of last year.
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