The Week Ahead

1.Geopolitical and Fiscal Events. Monday sees the latest interest rate announcement from the RBA. Tuesday sees Federal Reserve Chicago President Evans speak at 9:00 a.m. EST and then Federal Reserve Kanasas City President George speaks at 1:00 p.m. EST with Federal Reserve Dallas President Fisher at 7:00 p.m. EST. Wednesday see the latest Federal Reserve Beige Book released. Thursday sees the BOE and ECB out with their latest interest rate decisions.

2.Economic Releases. Releases of note this week include the weekly chain store sales, oil/gas numbers, mortgage applications and personal income, ISM Index, construction spending, monthly auto sales, ISM Services, ADP Payroll, Beige Book, Challenger Job Cuts and monthly jobs data.

3.Earnings Releases. Notable releases include MYL ENDP BNS AZO HRB PETM COST KR SPLS FL.

Palo Alto Networks (PANW)

Palo Alto Networks (PANW) a former holding in the Morning Matters Portfolio will report earnings after the close. By any measure to stock is very overvalued.For now we would avoid the name.

 panw

NRG Energy Inc (NRG)

NRG Energy Inc (NRG) will report earnings before the open. Estimates are for a loss of $0.04 versus $-0.90. There is some nice upside to this name as utility stocks have gotten oversold.

nrg

Madison Letter Weekly Update

Since inception, our overall timing return is 81.47% versus 48.56% on the S&P 500 for excess return of 32.91%.

The range between the buy and sell points is now above average. As an example, the S&P 500 range was 68 points at the low and is now 153 points. As volatility rises, this expands. Witness at the October low the range was 169 points.

Also, in tracking the range between the 2 year and 10 year we have seen the spread narrow by 39 basis points since October. The spread is now 138 basis points. This is a big drop for a couple month period but has expanded recently. Short term rates are on the rise while long term have fallen. This needs to be watched. There are implications.

We began to offer a buy and sell strategy via our Madison Market Timing Indicator at the beginning of April of 2007. There are now 24 open and closed winning trades to 8 closed losing trades with our market timing results.  This column replaces the Morning Matters on Fridays.

madison market timiing

Anheuser Busch Inbev SA/NV (BUD)

We just took Anheuser Busch Inbev SA/NV (BUD)for our buy list in front of earnings. We made 14% and feel this was enough for now. Estimates are $1.43 versus $1.46. The stock had moved above our price target and given the weakness in Boston Beer (SAM) we thought this would be a smart move.

bud

Weekly Charts Updated

Each week we highlight the SP500. We also track but do not show Russell 2000, NASDAQ Composite, UUP, EEM, TLT, HYG and LQD. The charts use the 50 day moving average slope indicator. When it is green we like the instrument we are tracking and when it is red we avoid the name/sector/asset class.

The S&P 500 is back above 0. Remember what matters is the slope of the 50 day moving average not the 50 day moving average itself.

All charts are created from www.erlangerchartroom.com and if interested in using this indicator in Chart Room please feel free to send us an email by using the Contact Us section from the home page. 

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Salesforce.com (CRM)

Salesforce.com (CRM) will report earnings after the close. Estimates are for earnings of $0.14 versus $0.07. The stock is fairly valued and not worth entering here. If long, we would remain with the name as it has yet to reach full valuation.

crm

Portfolio Update

The S&P 500 has moved higher for the fourth time in the last seven weeks. The Nasdaq Composite rose as well. The portfolio moved to 67% invested long, 0% short and 33% in cash, net long 67% with a new buy in the portfolio. We are now at a value of 999.12% from 979.26% from last Tuesday. We finished the year at a value of 951.10 up 29.86% for the year. Our current value is 999.12% which puts us up 48.02 or 4.81%.

Below are the year by year results on a cumulative and absolute basis: 

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Jazz Pharmaceuticals (JAZZ)

Jazz Pharmaceuticals (JAZZ) is typical of many biotechs names. They are trading at their upper limits and not on valuation but the potential of new drugs in the pipeline. Earnings are due after the close on Tuesday. Estimates are $2.31 versus $1.72. Nice growth but still fully valued. 

jazz

Texas Roadhouse (TXRH)

Texas Roadhouse will report earrnings after the close. Estimates are $0.26 versus $0.24. The stock is fully valued as are many restaurant stocks as investors have flooded into this sector due to the drop in price of gasoline.

 txrh