Retail Stocks: Showing Some Improvement

By George Leong, B.Comm.

I must admit the fact that consumers continue to spend despite any strong or sustained job growth and continued weakness in housing is encouraging. With consumer spending accounting for two-thirds of GDP, retail sales will eventually be stronger when the jobs and housing areas improve, albeit it will likely take over a year.

The headline Retail Sales reading for July increased 0.52%, in line with the consensus estimate, but above the upwardly revised 0.3% in June. It was the biggest increase since March and clearly offers some optimism that the economy may avoid another recession.

Excluding the auto portion, Retail Sales increased a slightly better than expected 0.5% versus the consensus estimate of 0.2% and above the upward revised 0.2% in June.

While we still need to see a sustained upward trend, the reading was encouraging. And with oil below $90.00 a barrel, gasoline prices have declined, which will add some disposable income for consumers to spend on goods and services. Of course, consumers are fickle and will continue to search for the best bargains out there.

At this juncture, I’m selective with retail stocks. My investment advice, my best stock advice, to you would be to stick with the leading discount bellwether retail stocks.

In the large-cap area, these stocks include Wal-Mart Stores, Inc. (NYSE/WMT), Target Corporation (NYSE/TGT), and Costco Wholesale Corporation (NASDAQ/COST).

Costco reported a 10% jump in its key same-store sales reading in July following a 14% surge in June. Net sales for July surged 15% year-over-year. The results are consistent and continue to show steady growth; but, for that extra bit of growth, you should look at the smaller discount retail companies.

Costco, for instance, has a market cap of $31.79 billion and is estimated to report sales growth of 13% and eight percent for the FY11 and FY12, respectively.

For comparison, take a look at small-cap PriceSmart, Inc. (NASDAQ/PSMT), an operator of 28 warehouse clubs in 11 countries in Central America and the Caribbean. PriceSmart reported a booming 20.9% increase in its same-store sales in July, along with a 23.8% year-over-year rise in July net sales. The reading was the 21st straight monthly increase. These are well above the growth metrics for Costco. Consider the comparative sales growth for PriceSmart, which is 22.3% and 14.2% for the FY11 and FY12, respectively. The growth estimates are probably conservative and could really take off if the expansion continues.

Another interesting discounter is large-cap Dollar General Corporation (NYSE/DG), which operates a staggering 9,300 stores across 35 states. Dollar General has reasonable valuation, trading at 12.26X FY13 earnings per share and a price/earnings growth ratio of 0.80. The stock has above-average price appreciation potential for investors.

When the housing and jobs areas pick up, I expect spending to increase quicker, especially on the non-essential Durable Goods.

My favorite in the retail space continues to be the discounters and big-box stores. The big-box stores are now selling a broad range of electronics and are adding to their product line. This will offer consumers a one-stop place for shopping and make more money for these companies.

Retire on This One Hot Stock!

This stock is up 232% since we first picked it. Our expert analysts say it will go up another 100% in the next 12 months! Our top 19 stock picks were up an average of 173.57% in 2010 (not a misprint). See where we are making money in 2011 and get our combined 100 years of investing experience working for you starting today.

Get your FREE report on our top stock pick immediately here.

http://www.profitconfidential.com/pcabs/

Visit our site:

http://www.profitconfidential.com/

Choppy Trading Action Here to Stay —It’s an Index Trader’s Paradise

By Mitchell Clark, B.Comm.

I think investors really want to be buyers of stock at this time, but there isn’t much of a catalyst to do so. Institutional investors are buying, but they’re also playing on the market’s volatility, accentuating the results. Reality is beginning to set in now and there’s a realization that corporate earnings are actually going to be strong in the bottom half of the year. The employment situation isn’t great and neither is the real estate market, but the corporate economy is well-positioned to deliver solid earnings growth and this makes the current stock market look very reasonably priced.

Big, long-term investors relish the opportunity to buy stocks when the indices convulse on the news of the day. Whether it’s adding to existing positions or taking on new opportunities, institutional investors (and insiders) are buying blue-chip stocks in this market.

There’s been a lot of bad news lately that’s taken a toll on investor sentiment, but I view the reduced expectations for the economy as now being built in to current share prices. The big, remaining investment risk has to do with the sovereign debt issue inEuropeand the potential for a cascading run on banks in European countries. Because of this very real and serious investment risk, there continues to be an attitude of wariness about the domestic equity market.

Along with the S&P 500 Index, a lot of large-cap stocks that were the market’s leaders have crossed their moving averages on the downside. Technically, the argument for a rising stock market holds very little water. The only good news is that the stock market isn’t overvalued. Because of strong earnings and a reasonable valuation, the market is actually holding up quite well.

What everyone wants to know is what the future holds for the economy and stocks and it’s fair to say that the question is unanswerable. In my mind, the case for the bulls and the bears is about even. We could go into recession again. The stock market could go down some more. Or, the interest rates that are artificially low might finally produce the catalyst for the economy to accelerate in the fourth quarter, and so might the stock market. This is why a lot of individual investors are sitting on the sidelines; there isn’t much in the way of definitive economic analysis to take any bold, new action in this market.

What I know is that investment risk for equities remains very high at this time. Large-cap, higher-dividend-paying stocks should outperform small-cap stocks and micro-cap stocks. Gold shares remain the most attractive for equity speculators.

In a market without any defined trend, the news of the day makes the trading action. Expect more choppy trading action in the weeks to come. Pronounced stock market volatility is here to stay for a while.

Retire on This One Hot Stock!

This stock is up 232% since we first picked it. Our expert analysts say it will go up another 100% in the next 12 months! Our top 19 stock picks were up an average of 173.57% in 2010 (not a misprint). See where we are making money in 2011 and get our combined 100 years of investing experience working for you starting today.

Get your FREE report on our top stock pick immediately here.

http://www.profitconfidential.com/pcabs/

Visit our site:

http://www.profitconfidential.com/

U.S. Dollar and Gold: An Anniversary

By Michael Lombardi, MBA

Forty years ago today, U.S. President Richard Nixon appeared on television to tell the world that the U.S.was severing the relationship between gold bullion and the U.S. dollar.

Back in 1944, in a historic agreement reached in Bretton Woods, New Hampshire, the U.S. government agreed to redeem U.S. dollars for gold bullion at the rate of $35.00 U.S. for one ounce of gold for the central banks of foreign countries.

The relationship established between the U.S. dollar and gold bullion at Bretton Woods was often referred to as the “gold standard.” Based upon the relationship between the greenback and gold, at Bretton Woods, the central bankers of foreign countries agreed to adopt the U.S. dollar as their official reserve currency. In a nut shell, the U.S. backed its fiat money with gold bullion and foreign central banks backed their currency with U.S. dollars. All the currencies had a link to gold.

Thirty-three years after the Bretton Woods agreement, on August 15, 1977, Nixon took to the airways to tell the world and in specific to tell the central banks of the foreign countries that the U.S.was reneging on the gold standard deal established at Bretton Woods.

We all know what happened once the tie between the U.S. dollar and gold was eliminated: The U.S. government was free to print money as needed, as it no longer had to worry if it had enough gold in its vault to back all the money being printed. Since the abandonment of the gold standard, the value of the U.S. dollar has lost considerable ground…a process called “inflation.” It takes a lot more U.S. pennies to buy a cup of coffee today than it did in 1971.

There have been very stark critics of America’s action in abandoning the concept that fiat money should be backed by gold. Some say lack of the gold standard has caused global economic instability since 1977.

But since 2002, another phenomenon has occurred. The price of gold bullion has boomed. Gold has risen in price from $300.00 U.S. per ounce in 2002 to almost $1,800 today—a gain of 500%. And some economists, like me, are calling for gold to hit $3,000 per ounce.

There are many reasons why the price of gold bullion is skyrocketing. (I have written about those reasons in PROFIT CONFIDENTIAL countless times and will continue to write about why I believe the price of gold will rise.) Ultimately, I would not be surprised to one day see the value of the U.S. dollar somehow tied back to gold bullion.

Michael’s Personal Notes:

I love the weekends, as they give me time to catch up on my much-needed reading. All week long, I’m inundated with research reports. Sunday afternoons is my time to open up a bottle of Brunello and spend a solid four to five hours just reading financial reports on everything from the market, the economy, and precious metals, to individual stock sectors and other forms of investment.

What I’m finding quite fascinating is the number of analysts who are deeply bearish on America. I’ve never quite seen anything like this before…so many people calling for the demise of America.

On the one hand, these are smart analysts who bring up very good facts to back up their solidly bearish views. On the other hand, I’m wondering if all this bearishness is getting overblown. After all, when does the market or economy do what is expected of it?

Here are just two reports from the weekend:

Elliot Wave expert Robert Prechter believes that the U.S. is in the early stages of a depression right now.

Well-known investor Jim Rogers, who is highly critical of specific people in Washington, predicts that the U.S. will eventually default on its debt obligations. Rogers believes that the U.S. economy never left the recession that started in 2008 and that we are still in a recession.

Yes, I’ve been very bearish on the economy as well. But, as a contrarian, one really has to wonder: will the stock market and economy really roll over and perform as the majority of analysts predict?

Where the Market Stands; Where it’s Headed:

I continue to hold the belief that a bear market rally that started in March of 2009 presides. According to a report from EPFR Global, a Massachusetts-based research firms, investors pulled more money out from global stock funds last week than any other week since 2008. And we all know what happened after 2008; stocks rallied big time.

I’m going against the popular opinion, as usual, on this one. While many stock advisors are saying that stocks are dead, the rally is over, I’m sticking with my belief that the bear market rally, in spite of it being “long in the tooth,” is still alive and well.

The Dow Jones Industrial Average opens this week down 2.5% for 2011.

What He Said:

“I’ve been pushing gold bullion and gold shares for over a year now. Back in January 2002, I personally started buying gold shares.” Michael Lombardi, PROFIT CONFIDENTIAL, December 13, 2002. Gold bullion was trading under $300.00 an ounce when Michael first started recommending gold-related investments. Michael has remained steadfastly bullish on gold since 2002.

Retire on This One Hot Stock!

This stock is up 232% since we first picked it. Our expert analysts say it will go up another 100% in the next 12 months! Our top 19 stock picks were up an average of 173.57% in 2010 (not a misprint). See where we are making money in 2011 and get our combined 100 years of investing experience working for you starting today.

Get your FREE report on our top stock pick immediately here.

http://www.profitconfidential.com/pcabs/

Visit our site:

http://www.profitconfidential.com/

How Can You Be Confident When the Fed Is Not?

By George Leong, B.Comm.

The Federal Reserve just met for its Federal Open Market Committee meeting and I can tell you I was more nervous after reading the Fed statement than before.

It became clearer the Fed is quite nervous about the condition of the economy and where it is heading. The Fed admitted that the U.S. economy is growing at a slower pace than they had hoped it would. Hey, no surprise here. We realized it. So did the Fed, but they needed evidence.

How about the unemployment rate at over nine percent? The Fed feels that jobs will be an ongoing issue going forward with the Unemployment Insurance (UI) rate holding at around nine percent for the short to medium term. Job creation continues to be stagnant, and it has worsened, according to the Fed. My economic analysis is that jobs will be a critical risk for the economy.

The Fed also said that “household spending has flattened out, investment in nonresidential structures is still weak, and the housing sector remains depressed.” No kidding! The mortgage and credit crisis has killed the housing market, and it will be years before we see any sustained recovery. The S&P Schiller home price index continues to point to declining home prices across the nation with little optimism of rebounding prices.

The problem is the high record levels of foreclosures and short sales. Homeowners are house poor. Many have mortgages below the value of their homes. So do you blame them for moving out and leaving their vacant homes? No, you probably don’t—and there is still little help from the government and financial sector, which has its own issues.

My opinion is that at least the Fed has admitted the problem; so, now, armed with more cash to use from the higher debt ceiling, there are options for the possibility of QE3. Of course, this will also add to the massive debt that could swell to over $16.0 trillion. Just take a look at the national debt clock—it’s scary. At least interest rates will be low.

My view is that the country will face difficult times going forward. The Fed has its hands full to try to turn around the massive U.S. economic engine.

The Standard & Poor’s downgrade of the U.S. credit to AA-plus from triple-A is worrisome, as the country may have to increase its risk-adjusted yields to attract buyers of debt. This in turn would place extra burden on the U.S. Treasury and continue to make it difficult to deal with the massive debt and deficit. The S&P 500 is also looking another potential downgrade to AA in November. The rating agency is also looking at U.S. local and state governments with exposure to these debts.

While there is a risk of another recession, the likelihood is low at this point. However, it could pick up if the U.S. economy falters. JP Morgan Chase & Co (NYSE/JP) downgraded its estimate for the U.S. Q3 GDP to 1.5% from 2.5%.

The fear now is the occurrence of another recession in the U.S. and globally. It’s also feared that the downgrades could be enough to trigger another sell-off and financial collapse.

At this juncture, the near-term upside potential appears to be limited unless there are new reasons to entice investors to buy.

Retire on This One Hot Stock!

This stock is up 232% since we first picked it. Our expert analysts say it will go up another 100% in the next 12 months! Our top 19 stock picks were up an average of 173.57% in 2010 (not a misprint). See where we are making money in 2011 and get our combined 100 years of investing experience working for you starting today.

Get your FREE report on our top stock pick immediately here.

http://www.profitconfidential.com/pcabs/

Visit our site:

http://www.profitconfidential.com/

First Stocks, Then Real Estate—What’s the Winner Going to Be This Decade?

By Mitchell Clark, B.Comm.

I think it’s probable that the stock market will continue to convulse for the rest of the third quarter and into the fourth. The trend in economic news is down and so is investor sentiment. We still have a lot of problems with sovereign debt issues in Europe and this is an investment risk that isn’t going away anytime soon.

Right now, investor expectations are being dramatically reduced. The marketplace now expects little to no growth in gross domestic product (GDP) and investors aren’t expecting much, if anything, from the stock market. I still expect both the third and fourth quarters to be very good in terms of corporate earnings, so my view is that the stock market will undertake a prolonged period of consolidation around current levels, with chances of rallying in the fourth quarter.

The old adage that investors should “sell in May and go away” perfectly illustrates a fitting strategy this year. If you pull up a chart on the S&P 500 Index, you’ll see the market’s substantial price appreciation from last September. Then in May, the market began to consolidate; slowly deteriorating until its recent move, breaking both its 50-day and 200-day moving averages.

The S&P 500 Index has actually been in a period of consolidation for the last 11 years. Pull up a long-term chart on the Index and you can see it plainly. What you will also notice is the current price action, which looks like a right shoulder formation from the head set in 2007. It’s an ominous-looking pattern and, when looking at it, you can’t escape the feeling that the trend is going to complete itself. If it does, it means the stock market could be in for a lot more pain. Over the last decade, 800 on the S&P 500 stands out as the bottom support point. Regardless, the buy-and-hold investment strategy has barely paid off over the last decade. Without dividends, investment returns would now be negative, as the S&P 500 is currently trading below its level in December of 2008.

Clearly, the best stock market advice would have been to buy technology stocks and Internet stocks in the 1990s. Then, the best subsequent investment strategy would have been to cash out of the stock market and buy real estate for most of the next decade. Now, it would seem, precious metals and agricultural commodities are experiencing the best price action from the global business cycle. First it was stocks, then it was real estate. Now the future belongs to commodities.

I think the commodity price cycle will keep running for a number of years and, in a period of slow economic growth, investors need to have significant exposure to this sector. The fundamentals haven’t favored stocks for quite a long time. The real estate cycle was strong and highly profitable for those who got in and out at the right times. Now, all the debt in the world and money supply growth is creating a sustained period of higher inflation. Going forward, commodities and those assets that benefit from higher inflation will be the winners.

Retire on This One Hot Stock!

This stock is up 232% since we first picked it. Our expert analysts say it will go up another 100% in the next 12 months! Our top 19 stock picks were up an average of 173.57% in 2010 (not a misprint). See where we are making money in 2011 and get our combined 100 years of investing experience working for you starting today.

Get your FREE report on our top stock pick immediately here.

http://www.profitconfidential.com/pcabs/

Visit our site:

http://www.profitconfidential.com/

New Higher Margin Requirement for Gold an Investor Opportunity

By Michael Lombardi, MBA

After months of patient waiting, the gold stocks came to life yesterday. Right across the board, whether it was junior or senior gold producers, the stock prices of gold companies were up sharply Wednesday.

Hopefully, my readers have been following my guidance and seeking refuge in the gold-mining companies. Since the spring of this year, gold bullion prices have been rising sharply, while gold stocks stood pat. I have been writing that the leaders of the gold bull market would shift from the actual bullion to the gold stocks, and that’s what started happening Wednesday.

Since the middle of June, the Dow Jones U.S. Gold Mining Index (an index comprised of the largest U.S. gold-mining companies) is up 12%, while the general stock market has gone down 11% in the same time period!

But, like all good things, as the price of gold bullion hits $1,800, there are forces that want to put a wrench in the 10-year gold bull market, as many believe gold has become too speculative. Hence, this morning, we learn that CME Group Inc. (CME), the world’s largest futures market, changed the rules without advance warning and increased the minimum amount of cash speculators and investors must deposit to trade a futures contract of gold.

In summary, margin requirements, with a flick-of-a-switch, have increased by 22% this morning. You may remember, the CME did the same thing to silver (increased the margin requirements for trading silver a few months ago) and silver fell sharply in price.

Well, I have news for the market, and better news for my readers. The bull market in gold is too strong to have the metal fall in value by 30% as silver did after the CME increased the margin requirement for trading silver futures.

For my readers, any pullback on the price of gold bullion caused by the CME’s newly imposed margin requirements would present a perfect buying opportunity for the junior and senior gold-producing stocks, once again. This is how to invest in gold now.

Michael’s Personal Notes:

On Tuesday of this week, the Federal Reserve made the unprecedented action of specifically saying how long it would keep short-term interest rates low. I’m sure you have heard. The Fed will keep rates low through mid-2013.

On the news of a prolonged period of interest rates that are low, U.S. Treasuries rallied. It doesn’t matter if Standard & Poor’s has cut the credit rating of the U.S. It doesn’t matter if Congress has just given the Obama Administration another $2.1 trillion to spend. Investors want U.S. Treasuries.

Yesterday’s auction of $24.0 billion in 10-year U.S. Treasuries was the first offering of U.S. debt since Standard & Poor’s cut the U.S.’s credit rating. There was a line up to buy these bonds—and the buyers walked away with the lowest yields on record—2.14%.

At 2.14%, the dividend yield of the Dow Jones Industrial Average stocks of 2.8% sure does look competitive.

Where the Market Stands; Where it’s Headed:

It’s up and down, down and up for the markets. My readers need to understand that, when we have huge multi-100 point up and down days on the market, most of that trading is computer-driven. Very little of it has to do with individual investors buying or selling. Since the advent of index-traded funds, computer/automatic trading has become a big part of Wall Street.

What am I doing? I’m sitting back and waiting. The current situation could go one of two ways. The market could move from here to test its March 2009 lows or the first real correction of 2011 could be close to ending, at which point the bear market rally would resume its upward trend.

I’m in the camp that believes it is too early to test the March 2009 lows for a variety of reasons I have written about over the past two weeks. Some of those reasons: stocks are a better investment alternative today to 10-year U.S. Treasuries; monetary policy remains accommodative; the great majority of investors are pessimistic; corporate profits are still strong; and corporate insiders are buying stock at a pace not seen since the spring of 2009.

What He Said:

“Consumer confidence does not change overnight. In the U.S., 70% of GDP is based on consumer spending. And, in my life, all the recessions I have seen or studied have only come to an end when consumers started spending. With consumer sentiment getting worse, and with the U.S.personal savings rate near record lows, it may take years for consumers to start spending again.” Michael Lombardi in PROFIT CONFIDENTIAL, February 25, 2008. By the end of 2008, the rest of the world was realizing that the recession would be much longer and deeper than most had imagined.

Retire on This One Hot Stock!

This stock is up 232% since we first picked it. Our expert analysts say it will go up another 100% in the next 12 months! Our top 19 stock picks were up an average of 173.57% in 2010 (not a misprint). See where we are making money in 2011 and get our combined 100 years of investing experience working for you starting today.

Get your FREE report on our top stock pick immediately here.

http://www.profitconfidential.com/pcabs/

Visit our site:

http://www.profitconfidential.com/

Stock Picking: Time Horizons Change, But the Environment Just Got Better

By Mitchell Clark, B.Comm.

The economy might be lackluster and there is a risk of another recession, but the stock market is fairly priced and the outlook for corporate earnings continues to be solid. The gyrations of the stock market are based on fear—fear of a future without growth. Small-cap companies are going to have a more difficult time generating earnings growth over the coming quarters because their operations are more closely tied to the domestic economy. Large-cap companies, such as those in the Dow Jones Industrial Average and many within the S&P 500 Index, are going to keep growing their earnings because of their international operations and a weaker dollar that translates into a better bottom line.

The economy no doubt has a lot of structural problems to overcome and it will take a few more years to do so. The fiscal situation has to be addressed and a measured, reasonable plan needs to be put in place to deal with deficits and debt. Excess inventory in the housing market needs to be taken up for homeowners to feel more secure about the valuation of their main assets. And, finally, the employment situation has to improve in order for incomes and consumer spending to rise. These are big hurdles to overcome and it will take more time to do so.

From the investor’s perspective, the fundamental backdrop of the economy is something we have to live with. Corporations continue to be running very lean operations and, with interest rates low and cash balances high, large companies can grow their earnings even if the domestic economy is stuck in an age of austerity.

Right now, the most attractive new investment opportunities in the stock market are large-cap, higher-dividend-paying companies with significant international operations. At the speculative end, gold continues to be the best play.

I think it’s fair to expect the broader market to continue gyrating for the rest of the third quarter. Technically, the main stock market averages aren’t looking good, but these significant pullbacks have happened before and stocks recovered. As you know, the stock market is all about betting on the future. Right now, the market is digesting an uncertain future with the expectation of weaker economic growth (or a possible recession). Beyond this expectation is a fundamental backdrop that looks pretty good from the investors’ perspective, as policymakers begin to address their finances and the housing market has more time to balance itself out.

Corporate balance sheets are in very good condition at this time. Insiders are buying their own shares. An economic analysis of the current data suggests that a period of slow to breakeven growth is likely in the bottom half of this year. In the not-too-distant future, the stock market will look beyond this expectation and investors will be buyers.

Retire on This One Hot Stock!

This stock is up 232% since we first picked it. Our expert analysts say it will go up another 100% in the next 12 months! Our top 19 stock picks were up an average of 173.57% in 2010 (not a misprint). See where we are making money in 2011 and get our combined 100 years of investing experience working for you starting today.

Get your FREE report on our top stock pick immediately here.

http://www.profitconfidential.com/pcabs/

Visit our site:

http://www.profitconfidential.com/

First Real Stock Market Correction of 2011—an Opportunity?

By Michael Lombardi, MBA

I know this might sound a bit off the wall, but it’s my opinion…

The recent correction in the market has little to do with Standard & Poor’s downgrading of the U.S. credit rating. After all, if we look at it, after the downgrade, U.S. Treasury bills rallied—more investors flocked to them instead of away from them!

It’s only logical that, if a country’s debt is downgraded by a rating agency, the country’s bonds will fall in value—but the opposite is happening in the U.S. This tells me that the market pull-back had little to do with the downgrading of the U.S. credit rating.

Stocks are down 4.6% for 2011. What we’ve experienced over the past few days is the first real stock market correction of the year. As I wrote on Monday, in the summer of 2010, stocks corrected to 8.5% below where they started 2010—and the market still managed to finish 2010 up about 10% for the year.

Make no mistake about it. There was big money made on Wall Street over the past few days, as the short sellers got what they were hoping for. It’s a global economy. Also, professional and institutional traders make up most of the trading activity these days—hence the market moves quickly. Computer-based trading kicks in quickly as the market moves up or down, intensifying the trend.

Let’s call a spade a spade…

Wall Street wants more from the Federal Reserve. Sure, Wall Street took in QE1 and QE2. But it wants QE3 or some other form of it. And I have a suspicion that the Fed will deliver what Wall Street wants, as it usually does.

The market sell-off has been overblown. I will even go so far as to say we will have a rally from the market’s severely oversold condition. Maybe a good time for some good, old-fashioned stock picking.

Michael’s Personal Notes:

Just when you thought you’ve heard everything…

The Bank of New York Mellon told large clients last week that it would charge them to hold their cash. The extraordinary measure of charging companies to hold their cash comes at a time corporate that America is socking away cash instead of investing it to grow their businesses.

We already know that, if you buy a 30-day Treasury Bill, you get a yield of 0.4% per annum. Hence, most corporations prefer to deposit cash in large, stable banks like Mellon.

Who would have thought a company would have to pay for a bank to hold its cash? What does this tell us? There’s too much money in the system. Banks are not lending it out because they are scared to. Corporations are not big borrowers these days either.

The way I look at it, if you are a strong, safe bank amid a glut of weaker banks, why not have your customer pay you to keep their money safe? It’s a great gig if you can get it.

Where the Market Stands; Where it’s Headed:

For the bear market rally in stocks that started in March of 2009 to be over, we would have to see the Dow Jones Industrial Average fall decisively below 9,658, the mid-point below its March 2009 low and May 2011 high.

In other words, for this bear market to move from Phase II to Phase III, the Dow Jones would have to break below 9,658.

Phase II of a bear market is when investors are lured back into stocks after the initial Phase I take down. Phase III is when stocks move back down to their Phase I price lows.

Yes, I know many investors and analysts are throwing in the towel on the stock market right now. I’m not ready for that quite yet.

What He Said:

“For the economy the message from retail stocks is quite clear: consumer spending, which accounts for roughly 70% of U.S. GDP, is in jeopardy. After having spent like ‘drunkards’ during the real estate boom years, consumer spending is taking the same trend as housing prices, slowing down faster than most analysts and economists had predicted. As news of the recession continues to make headlines in the popular media, the psychological spending mood of consumers will continue to deteriorate, lowering earnings at most high-end retailers and bringing their stock prices down even further.” Michael Lombardi in PROFIT CONFIDENTIAL, January 28, 2008. According to the Dow Jones Retail Index, retail stocks fell 39% from January 2008 through November 2008

Retire on This One Hot Stock!

This stock is up 232% since we first picked it. Our expert analysts say it will go up another 100% in the next 12 months! Our top 19 stock picks were up an average of 173.57% in 2010 (not a misprint). See where we are making money in 2011 and get our combined 100 years of investing experience working for you starting today.

Get your FREE report on our top stock pick immediately here.

http://www.profitconfidential.com/pcabs/

Visit our site:

http://www.profitconfidential.com/

Gold’s Burning up on the Chart; My Gold Advice

By George Leong, B.Comm.

The precious yellow metal is sizzling on the price charts, as traders shift capital from the higher-risk equities to the safe-haven sanctuary of gold.

The U.S. is battling crippling debt levels and deficits. Some cities across the nation are shutting down to save money. The once powerful U.S. economic engine continues to show breaks and is stalling at this most critical time for the country.

Over in Europe, we have the PIGS (Portugal, Ireland, Greece, and Spain) sucking money from the European Union and International Monetary Fund and taking away the ability to focus on growth.

We are also seeing some economic fragility in the BRICS grouping (Brazil, Russia, India, China, and South Africa). Brazil, India, and China are seeing some stalling in their economies and stock markets.

In China, you have inflation surging to 6.4% in June, the highest level in about three years. The Chinese central bank has increased the bank reserve ratios in an effort to stall lending. Slowing in China has an impact on the domestic and global economies that deal with China.

Domestically, you have a national debt of $14.5 trillion and this will grow to over $16.0 trillion with the debt ceiling increasing.

Given all of this risk, you should have some capital working for you in gold.

Gold is considered a safe-haven play versus that of silver. Investing in gold is a safe haven play when the overall market risk rises, as what we are currently witnessing.

On the demand side, China is a significant buyer of gold and this is expected to continue as the country hoards physical gold in its reserves. India is also a major buyer.

The reality is that gold is a limited resource that needs to be found and mined. There is a certain amount of global reserves in the ground, but, after that, there needs to be more exploration.

Gold has rallied in each of the last 10 years and shows a beautiful bullish price chart. My gold advice would be to accumulate gold on weakness.

On the chart, the October Gold traded at a record high of $1,683.50 on August 4 before retrenching. The current chart looks bullish on strong Relative Strength. There is a “golden cross” on the chart, with the 50-day moving average (MA) of $1,558 well above the 200-day MA of $1,451.

Some pundits have come out and suggested a $2,000 target on gold over the next few years. I even saw a staggering $5,000 price target on gold. Now the latter may be an extreme, but I feel that gold prices will continue to edge higher, especially if the U.S. economy falters and another recession surfaces.

In the current climate, gold represents the best bet, while silver continues to be a trading commodity based on the economic recovery and demand for electronics and industrial applications.

My advice to you is to buy a mixture of exploration-stage gold miners along with small to large gold producers. In this scenario, you can play both the potential aggressive gains of exploration stocks and the steady returns of the large gold producers.

Retire on This One Hot Stock!

This stock is up 232% since we first picked it. Our expert analysts say it will go up another 100% in the next 12 months! Our top 19 stock picks were up an average of 173.57% in 2010 (not a misprint). See where we are making money in 2011 and get our combined 100 years of investing experience working for you starting today.

Get your FREE report on our top stock pick immediately here.

http://www.profitconfidential.com/pcabs/

Visit our site:

http://www.profitconfidential.com/

S&P 500 Breaks Two Important Moving Averages, But Stocks Are Cheap & a Rally’s Near

By Mitchell Clark, B.Comm.

I find it surprising that the stock market reacted so strongly to news of weaker gross domestic product (GDP) growth and consumer spending numbers. It seemed fairly obvious that this was going to happen and the recent trading action in stocks suggests to me that institutional traders were just waiting for a catalyst to sell. They know that corporate earnings are decent, but with the S&P 500 Index right at the point of breaking its 50- and 200-day moving averages, the selling was pronounced.

So, with the main large-cap index having crossed these two important moving averages for the second time in two years, the stock market could actually go either way. But, this market isn’t expensive and that’s helpful. I see share prices just as easily consolidating between 1,200 and 1,100 on the S&P; even in the face of poor economic data. I don’t expect a total market breakdown, because there’s likely to be more stimulus from the Fed over the coming months (due to the stalled economy), interest rates remains very low, corporate earnings are good to very good, and there’s no other vehicle for institutional investors to generate a rate of return that beats the rate of inflation (this pertains to dividends). As I wrote previously, the current trading action in stocks looks very similar to what transpired between April and October last year.

Of course, stock picking right now is difficult. Now is the time to be considering new investments in large-cap, blue-chip companies that pay solid dividends. Now isn’t the greatest time to be a speculator, with the exception of gold shares.

As odd as this may sound, if you look at the charts and consider what news hit the wires and how the market reacted, I have to say that the stock market has been incredibly resilient since it bounced back from the March low of 2009. Big companies have been extremely good at managing their businesses in this slow growth environment and the fact that most have been able to grow their earnings is a real accomplishment.

It’s my feeling that large-cap earnings growth will fuel a stock market rally sometime in the fourth quarter and that the S&P 500 Index will be able to finish the calendar year with a low double-digit gain. According to Bloomberg, the Index is currently trading at 13.2 times earnings, which is 20% below the average valuation of the S&P since 1954.

If you were to sell the market right now, it would be a loud bet that the U.S. economy is going back into recession. Frankly, I don’t see this happening given all the current information. I’m not predicting that growth is going to be robust, but the economy is still trying to balance itself out after all its excesses and the numbers are going to be messy for a while longer.

The stock market is likely to be choppy and reactionary over the very near term. My economic analysis suggests that this is part of a bottoming process, setting the stage for a new stock market rally.

Retire on This One Hot Stock!

This stock is up 232% since we first picked it. Our expert analysts say it will go up another 100% in the next 12 months! Our top 19 stock picks were up an average of 173.57% in 2010 (not a misprint). See where we are making money in 2011 and get our combined 100 years of investing experience working for you starting today.

Get your FREE report on our top stock pick immediately here.

http://www.profitconfidential.com/pcabs/

Visit our site:

http://www.profitconfidential.com/