(September 29, 2012)
The market doesn't quite feel so bullish after another -2% decline in the S&P 500. The major indices are now down two weeks in a row following the QE-inspire spike higher. The overall trend is still up for the major averages but short-term we're correcting lower.
This past week produced a number of troubling economic reports. Now that the third quarter is over fund managers may feel more inclined to shuffle their portfolios even more and that could spark more volatility. October is infamous for its volatility. I am more inclined to wait and see if the S&P 500 dips toward support near the 1400 level, which could prove to be a nice entry point for new bullish positions.
I did strongly consider adding Family Dollar Stores (FDO) as a new bullish candidate. The stock is bouncing from a three-month correction while still in a long-term trend of higher lows. Yet FDO is due to report earnings on October 3rd. There is too much risk of holding a new positions over the announcement, especially when Q3 earnings are expected to disappoint Wall Street's estimates.
Instead of adding new trades tonight we are adding three new candidates to our watch list (FTR, KMB, and SIRI).