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MLR - Premarket Pulse August 3, 2012

General:

The choppy market environment has made it difficult for leading stocks to make much progress as the major indices have been driven by news oriented gap up / gap down action. The sawtooth formation that the market has traced out in the summer of 2012 underscores the challenging environment. Evidence of this whip-saw nature is seen in today's pre-market futures move after the ECB detailed a "Reverse Operation Twist" whereby it will seek to massively steepen the yield curve in Europe. In our view it is best to tread lighly in this market as we move through the last month of summer for the market and move into the September/October time frame, a period that historically is when the market has started strong new bull markets. Monetary intervention is at the ready, and outside of some upside bumps as a result of announcments regarding possible QE maneuvers by the ECB and the FED, we still tend to think that central banks will not intervene in full measure until absolutely necessary, and this means the market could continue in a choppy sideways to downward movement.

With knowledge of a weakening economy widespread, even to the point where the Fed changed their language in their most recent communique to recognizing "deceleration" in the U.S. economy vs. the prior "slow growth" mantra they've utttered in previous announcements, we consider today's jobs number a non-event as it still speaks to general underperformance of jobs growth still well below the 200,000 new jobs required just to keep pace with new entrants into the workforce - just ask the 52% of college graduates who can't find a job these days!

Stocks:

LinkedIn (LNKD) came in with a slight upside surprise last night on earnings and the stock has vaulted back above the $100 price level. Technically, however, the stock is in no-man's land with respect to it being in a low-risk buy position. However, LNKD is demonstrating that it understands how to monetize its own social-networking business as it relies on a more professional approach from its members in comparison to the voyeuristic/exhibitionist environment of Facebook. LNKD also has more diverse revenue streams with only 28% of their revenue coming from advertising - thus they aren't faced with the problem of figuring out how to shift the bulk of their revenues to mobile as FB is trying to do. LNKD may need more time to consolidate as it waits for new market trend to develop.

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This information is provided by MoKa Investors, LLC DBA Virtue of Selfish Investing (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2024 MoKa Investors, LLC DBA Virtue of Selfish Investing. All rights reserved.
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