Market Recap - WishList Stocks, Strong Economic Numbers

The market closed the session lower after comments from Fed Chairman Ben Bernanke were viewed by investors as hawkish. Suggesting another round of stimulus is not in the future. Stocks, gold, and nearly ever asset class were hurt by the remarks.

Top Stocks

Healthcare Services Group ($HCSG) - Pulling back from all-time high to support at the $18-$19 area. Pays a 3.2% dividend. Company provides housekeeping and dietary services to hospitals, nursing homes, etc.

Novellus Systems ($NVLS) - Maker of equipment that is used in the semiconductor industry. Pulling back to support after hitting a multi-year high. Support at $44.

Genomic Health ($GHDX) - Provides medical services and testing for the genomic industry. Consolidating after hitting an all-time high. Stock is aggressive, but in a high growth potential sector.

Strong Economic Numbers

The final GDP for the fourth quarter came in better than expected and showed growth of 3% for the country. This was higher than the 2.8% that was preliminarily reported. Also better than expected was the ISM-Chicago Manufacturing data which came in at a 10-month high of 64. The numbers back up the bullish tone that has been on Wall Street since the beginning of the year and helped stocks to early gains.

Sector Highlight - Timber

Two stocks that have been moving up the WishList are both in the same sector - Timberland REITs.

The REITs own timberland that can be very valuable during inflationary times, which I see being an issue in the coming years. Another bonus is the above average dividend yields.

Plum Creek Timber ($PCL) - Broke out of a consolidation pattern in January above $38 and has since pulled back and tested the support area that also has the 50-day moving average at the same level. Buying near $38 is the strategy. Pays a 4.3% dividend.

Rayonier ($RYN) - When $PCL was breaking out from a consolidation pattern, $RYN was hitting a new all-time high. Since rallying through $44 it has pulled back and has been consolidating near the $44 support area. Flashing buy signal today.

Gold Plunges - Do Not PANIC

The price of gold is falling by its largest amount in over two months today after Ben Bernanke did not hint of a new stimulus package.

The word on the street is that gold is falling by more than $75 per ounce due to no mention of QE3 in his semi-annual economic speech. Sure, that would be a factor for investors to take profits, but to hammer the yellow metal to this magnitude - no way!!

In the same speech Bernanke stated he will keep interest rates low into 2014. In my opinion that is a stimulus package dressed in a cheap suit. By keeping interest rates low it will continue to put pressure on the US Dollar and therefore be a positive for gold prices.

Today's sell-off will likely create a buying opportunity for long-term bulls on the price of gold. Support on $GLD can be found the the $164 to $166 range. The ETF is currently at $166.30. The selling may extend out a day or two, but as long as the support range is not breached, look for $GLD to bounce back.

Stock of the Day - Digital Realty Trust

Digital Realty Trust ($DLR)

The craze surrounding the niche cloud computing sector is real as evidenced by the booming market valuations of the companies and the number of small firms being purchased by the big tech names. Investors have a handful of names in the sector they could purchase to gain exposure to what that specific company may offer.

However, there is a secondary play on the cloud computing boom - a Real Estate Investment Trust (REIT).

Digital Realty Trust ($DLR) is a REIT that owns, develops, and manages technology-related properties. It focuses on properties that are centrally located and that can offer secure data centers to Fortune 1000 companies. As the need for more data and storage increases dramatically in the coming decade, the REITs that offer the properties to store this data properly will boom. $DLR is in this category.

On top of the fact the stock is breaking out to a new all-time high today, it also pays a 4.1% dividend, which is double that of the 10-year Treasury.

The ideal entry point is near the $70, as there is support near the $68 area.

Market Recap - Gold Rally, Junk Bonds, and Brazil Breakout

The major indices closed higher today with the only red mark on the screen being the price of oil, which lost 1.8% and closed at $106.60/barrel. The Dow gained 0.2%, S&P 500 0.3%, and the NASDAQ led the group with a 0.7% gain to a new 11-year high.

GOLD RALLY - Gold gained another 0.7% to close at $1786/ounce and could be well on its way back to the test the $2000 level. I believe it will occur at some point this year, giving the metal another 12% on the upside before that occurs. The SPDR Gold ETF ($GLD) gained 1%, but the real story was the 4.7% surge by the iShares Silver ETF ($SLV). Gold's little cousin is now at the best level since mid-September and is up 34% for the year.

** My firm owns shares of $SLV and $GLD

JUNK BONDS CHUG ALONG - The SPDR High Yield Bond ETF ($JNK) closed up 0.4% and is at the best level since early August. In the beginning of the year I made a call that I would rather own $JNK over the S&P 500 ($SPY). So far the $SPY is up 9.5% and $SPY is up 5%. I am not giving up, it is a long year ahead and when volatility is taken into consideration, $JNK is not trailing $SPY by that much.

**My firm owns shares of $JNK

BRAZIL OUTPERFORMING - The iShares Brazil ETF ($EWZ) closed up nearly 2% today to finish at the best level since early August, outperforming its emerging market peers. The ETF is up a whopping 22% for the year and still have plenty of room to run to get back to the 2011 highs. Two often overlooked Brazilian ETFs are also having solid years. The Global X Brazil Consumer ETF ($BRAQ) and the EG Shares Brazil Infrastructure ETF ($BRXX) are up 30% and 23%, respectively. In an interview I gave to Investor's Business Daily (IBD) my top ETF pick for 2012 was $BRXX.

**My firm owns shares of $BRXX

Hot ETFs to Watch Today

iShares Silver ETF ($SLV) - Taking advantage of a weak US Dollar and more money flowing into the precious metals, $SLV is back to the best level since September. Even though the ETF is up 36% from the December low, it is well off the high set last April.

EG Shares Emerging Markets Consumer ETF ($ECON) - On pace to close at its best level since it began trading during the third quarter of 2010. Since 9/15/10 the ETF is up 21% versus a gain of only 2% for the iShares Emerging Market ETF ($EEM). I prefer $ECON over $EEM any day!!

Global X Social Media ETF ($SOCL) - Up over 3% today as several of its holdings ($RENN, $GPRN, and $ZNGA) are having solid days. I am still skeptical of the ETF, but the momentum may continue to push it higher.

* My firm owns shares of SLV and ECON.

Agricultural Chemical Leaders

Today's article on the Ag Chemical Stocks that have been taking off in 2012 and how they may be returning to the top of the Leaderboard.

Agricultural Chemical Leaders

Housing Numbers Not Improving - But Bottom Is Here?

The Case-Shiller 2011 year-end readings show that all three major indices (national, 20-city, and 10-city) close at their lowest readings ever. Numbers last week showed housing prices fell 2.4% in 2011, but increased during the fourth quarter of the year.

The numbers continue to be weak, however the magnitude of the downtrend has slowed dramatically and this could be a major step in forming the bottoming process. If the home-related stocks are any indication, the bottom will be found in the very near future. The iShares Home Construction ETF ($ITB) is up 16% in 2012 and well off the lows of early October. The ETF hit a 52-week high in early February.

I am not one to try and predict a bottom for any downtrend in the market or life. However, my gut tells me that a bottom is near for the housing market as long as another black swan does not appear in the sky.

Stock of the Day - Valeant Pharma

Valeant Pharma ($VRX)

A stock that has been on my radar for quite some time and flashed a buy signal last week is $VRX, a growing pharmaceutical and drug delivery company. Late last week $VRX experienced an RSI Crossover Buy Signal, however we did not buy into the stock because it was due to report earnings Monday morning.

The earnings were better than expected and after a wild day the stock closed with a 5.5% gain and is back above its 50-day moving average. Revenue jumped 34% in the quarter and more than doubled in 2011 versus the prior year.

Net income for 2011 came in at 49 cents per share, which is not bad. However, it expects earnings per share in 2012 to be between $3.95 and $4.20. Analysts expect $4.08 per share.

Based on earnings of $4.08 in 2012, the stock trades with a P/E ratio of 12.4 and a PEG ratio below 1.0. This makes $VRX undervalued at current prices ($50.58).

The key is to watch trading the next few days after the big volume earnings day on Monday and determine what a good entry price if for the stock. Key levels are the 50-day MA at $47.50 and resistance at $51.50.

Top Performing Sectors Today

The financials led the way today with the SPDR Financial ETF ($XLF) up 0.75% and back to the upper end of the month-long consolidation pattern. A breakout above $15 will start a new buy signal for the financials.

Another risk-on sector rallied today with the SPDR Consumer Discretionary ETF ($XLY) closing up 0.6%, its best close ever! A pullback to $42 would be the next buying opportunity.

Market Recap - Oil Falls, Apple New High, 2 Fav Tech Stocks

The major indices closed near the flat line today with the Dow down 1 point and the NASDAQ and S&P 500 both gaining 2 points. This is after 1% sell-off to begin the session, followed by a rally after better than expected housing numbers were released. The bulls could not hold onto the gains, but overall the rebound off the lows keeps the strong bull trend intact.

Oil Falls - The price of oil fell by $1.21 or 1.1% to $108.56 barrel, breaking a 7-session winning streak for the Black Gold. The recent high was the best level in 9 months as supply concerns over Iran and the rest of the Middle East hang over the market. Then there is demand issues as Europe avoids a disaster and growth continues around the globe. A pullback for the US Oil ETF ($USO) to the $40 area will be the next buying opportunity ($41.25 last trade).

Apple New High - The largest company in the country by market cap increased its size today as it traded up to $525. The gain for 2012 now stands at 29%, easily beating the major indices. I would not be a buyer today as the stop is overextended in the short-term. On the flip side, trying to short $AAPL has not been a good idea for years and probably not the best move at this time.

2 New Favorite Tech Stocks - Today marked the first time in quite some time that I decided to buy into 2 technology-related stocks in the same day. Both stocks are leaders in their respective sector and have the charts and fundamentals to back up the case for buying today. Stock #1 is my play on social media and Stock #2 is a tech stock that pays a dividend over 3%.

*Subscribers can email info@pennfinancialgroup.com for the name of the two stocks.

New Favorite MegaCap Stock - Intel

The grand daddy of the semiconductor stocks, Intel ($INTC), is back on my radar and this time for a positive reason

The stock broke out of a month-long consolidation pattern last Friday and hit the best level in over four years. The stock, long considered a bellwether for the semiconductor and overall technology sector is up and running again.

The chart below shows the breakout of the consolidation pattern (two horizontal lines). Technically the stock looks great as long as it holds the $26.50 to $27.00 area on any pullbacks in the coming days. If INTC can test the level and hold it will trigger a buy signal.

Fundamentally my attractive to the stock increases. A PEG ratio of 0.97 is great considering it is a megacap tech stock that is not growing nearly as quickly as it was in the past. And add in the 3.1% dividend yield and INTC looks like a great catch at current levels.

** My firm and myself do not currently own any shares of INTC.

Morning Outlook - Dow 13K, Yen, New Oil Highs

Dow 13K

Yesterday the Dow eclipsed the 13,000 level for the first time in nearly four years, but was unable to hold onto the psychological level. Even thought the 13K level is meaningless on a technical basis, it does hold significant psychological importance to some investors. I am sure there were a a handful that told themselves they would sell once the Dow got back to 13K - and apparently they did just that yesterday. As fun as it is to watch the big round number, you need to realize the more important level to watch is support at 12,750 area on any pullback. The DIAMONDS Trust ETF ($DIA) tracks the Dow 30.

Japanese Yen

The Japanese Yen continues to fall versus the US Dollar as it hits a new 7-month low this morning. This is due to more action by the Bank of Japan to get the CPI back into positive territory. To achieve this goal it will look to force down the value of the Yen. The Rydex CurrencyShares Japanese Yen ETF ($FXY) has broken support and we are considering selling the remainder of our shares and locking in a double-digit gain for clients. It is tough to fight the BOJ.

Brent Crude High

At nearly 78.71 Sterling per barrel, Brent Crude is at a record high in Sterling terms. What does this mean to you and I? Well if the high oil price has a negative affect on the UK and other European countries it could exasperate the slowdown in the region and could spill over to the US. This is a situation we need to keep our eyes on. The United States Brent Oil ETF ($BNO) is trading at an all-time high.

Bullish Chart And High Dividend Yield

My article on stocks with strong charts and high dividend yields.

Bullish Chart And High Dividend Yield

Five 52-Week Highs I Like

A growing number of stocks are hitting new 52-week highs today and five that are catching my eye and are on my WatchList are:

• SPDR S&P Biotech ETF ($XBI) - For the last few years the biotech stocks have looked good heading into January. This year the sector broke out and it appears it is ripe for a strong 2012. Wait to buy on a pullback.

• Healthcare Services Group ($HCSG) - Provides housekeeping, laundry, maintenance, and dietary services to hospitals and managed care facilities - pays a 3.5% dividend.

• Viasat ($VSAT) - Maker of wireless communications, networks, and satellites for the government and private customers.
  

• Realty Income Corp ($O) - A REIT that owns commercial real estate in the US - pays a 4.8% dividend.

• Wal-Mart ($WMT) - Unless you live under a rock you know $WMT. The largest retailer in the US is breaking out today - pays a 2.4% dividend.