May 9, 2018
"Stocks in the Spotlight's"
A CURRENT UP-DATE
Nasdaq symbol in ( ) = Quote
-- News in ( ) = news
on each will take you there
Week's Closing Indices
Looks Like Rough Weather Ahead
The Markets Are Moving On What Might Happen
are telling us there is rough weather ahead making it important we have are sea legs under us. The last
52 week high on any index (except for the Nasdaq) is January 26, 2018. Currently none of the
indices are in correction territory (more than 10%
from the 52 week high). Three weeks ago there was 6 indices in correction
territory (all the narrow indices) while the other 5 tend to cater to
the OTC stocks, which is a bullish sign for the near term.
The main reason the markets are so hard to figure is because they're
falling on what might happen and not what is happening. The recent
increase in interest rates of 1/4%
was expected but the recent "no change" was a surprise. One of the
reasons for the falling markets was investors thinking the Feds are
going to increase rates
too far and too fast, but this is only what might happen.
Another big factor would be the rumors of trade wars because of Pres.
Trump's wanting to align the United States with better deals than we've
gotten from almost all former presidents. The problem, there is no
trade war and there's no guarantee there will be one. Again, this is
what might happen.
I've always felt that markets that fall on what might happen will
not stay down and end up resuming the bullish stance that
positive consumer confidence, lower tax rates and higher employment
tend to bring with it. Of course there is also another problem. Many
times when consumer confidence is high, as it is now, means we're
near the top of the market.
also need to be aware of the possibility of imposing tariffs on as much
as $60 billion worth of Chinese imports to punish Beijing for the theft
of American technology. Why not! China charges the U.S. tariffs, but it hasn't happened yet.
Of course it appears China wants to avoid any trade war and is willing
to work with the USA on something both sides can work with.
believe that once the dust settles investors will like standing up for
our products and our workers in the long run. I also believe
manufacturing will continue to increase as more products are "Made in
I do not believe the bull market is over and I would expect the selling
to ease soon. Just announced was a 4th Q GDP of 2.9%, meaning the
economy is running strong and best part was the bulk of growth was in
The economy has been waiting a long time for companies to start spending and
this renewed spending will only lead to better places for all of us.
I do not believe the average investor is participating in
the selling. The giant swings are the institutions, money managers and
speculators buying, selling & shorting on a daily basis and not for
the weak at heart investor.
I have always said the big correction will come from investor fear of
losing years of profits and I just don't see that "fear" in the current
activity. Actually the markets seem to be in a trading range and once
the rumors take a breather the bull should be in "charge" again.
Will there be a trade war? I doubt it but if so than so be it. China needs the U.S. more than it needs them.
Will inflation continue to climb? Probably, right along with rate increases, but not too far and not too fast, I hope.
Will the tax breaks make a difference? Certainly, all the difference in the World. They are the gift that keeps on giving.
Will there be a War with NOKO?
I have no idea and neither does anyone else. We can never let our
investing be decided by "if there will be a War or not." It is out of our
control. Bet against it and if good news comes out of NOKO the markets will like it.
Will the markets return to climbing? Probably, with all the great
economic news how could it not. It has not even started to run the
course, therefore it should still have much strength in reserve.
However! There are signs of weakness in the indices, but so far the
narrow markets are in a correction and the broad markets are not.
One problem for me is the NY index was at correction, down 8.19% from
the high, while the VL and the Nasdaq were still down less than 5%, off 4.66% and 4.26%.
Since I believe the big OTC stocks tend to lead the markets this could
mean higher ground ahead, but not yet. As long as the VL & Nasdaq
fair better than the NY the rally should still be on track. Its when
the NY is doing better then the VL & Nasdaq we have to worry.
My rule is: The markets cannot rally very long without the big OTC stocks.
DOW 30 chart below is an average of all 30 of the Dow Jones industrials
and what percentage the total are away from the 52-week high. I use it as a
measure of when markets are undervalued, or overvalued, simply
because these 30 stocks are carried by just about every fund there is.
Keep in mind, since it is a discount, the percentage can never be in
The record for the
discount to the 52-week high is - 2.87% reached on 1.8.2010.
The maximum discount was -52.76 on 11.20.2008 showing just how far this index can move. Currently the discount rate is -11.61%,
meaning there is some "wiggle" room to continue improvement, but the nearer the
average of all 30 stocks come to the 52-week high the more overvalued they become. In 2016 there were 24 that reached a new 52-week high, 25 reaching a new high in 2017 and 24 so far in 2018.
This discount had
been trading mostly between -7% and -5% from December of 2016 all the way to December 2017, with a breakout to under -4% twice, but recently between -8% and -14% with a low of -9.97% on 4.17.18.
once an index or stock sets a new high the next new high is easier to
only has to
break the current one by 0.01%. Also, Once the previous 52-week high
it is easier to set a new high. The DOW 30 has set a new high more than 85 times since the election.
of losing profits will be the reason forcing the markets down
rapidly, which in an overvalued market is, and should be, expected.
Nothing goes up forever, however the new tax cuts for corporations will make a big difference in valuations and provide much
fuel for the bull to keep charging.
trend is our friend and it appears to be leading the markets to roller
coaster ride through the last few weeks of the first Q and continuing
The markets could continue this way all the way to the November
elections but if the demo's win Congress get out because the drop will
We need to keep our cautious shoes on and tread through the bargains.
Look for the deals and look at newer and start up
companies and do the homework.
A best bet might be a small stock that reads good and offers a
decent chance. Small stocks tend to trade on their own and are not a sensitive to the overall market. It needs to be trading near the low-end but with a
reason to climb. Again, they are out there. We just have to search hard
to find them.
Maybe The Best Place To Be
The Small Stock Arena tends to be strong over the next 3 months.
Considering the markets are so overvalued Small Stocks might be the better bet!
I am currently looking at several small stocks and as soon as I come
up with what I think is a "bargain" I will let you know
Powin Energy - (OTC-BB) (PWON) (52 week range 0.30 - 5.00 ), now at $1.76.
From $0.30 to $5.00
Corporation (PWON), a leading manufacturer of fully integrated energy
storage solutions, has sold over 110MWh of select project assets and
contracted pipeline to esVolta. esVolta recently received a large
financial commitment from Blue Sky Alternative Investments LLC to
accelerate its growth in the North American utility-scale energy
storage market. Powin Energy will be esVolta’s exclusive provider of
energy storage systems through 2022.
News:Powin Energy Sells 110MWh of Operating Projects and Pipeline to esVolta
Clicking on the headlines will take you to the article.The link will open in a new page)
Powin has the right industry, the
time and the right product, a recipe for a much higher price on the
stock. Its hard to convince you to buy such a slow mover, but when it moves it may be a big move and too late to get in.
The problem is
not very many shares are available anywhere, and the stock trades by appointment making anything
under $3 a
From $1.75 to over $15.65
Advanced Micro Devices (AMD) (52 week range 7.77 - 15.65 ), now at $11.92.
has been caught in a battle with NVIDIA with both
working on new chips.
increased estimates for the Q as the company's new Ryzen Desktop CPU,
Vega, GPU and Epyc server CPU are gaining traction within their various
markets as the new chips could take a big share from its competitors.
OK here but the stock has been following the market therefore if the
markets continue to back off we could see under $10 again. Learn as
much as possible and be ready when it trades
lower. We could easily see over $20 in 2018.
Best if in under $10.00!
From $0.27 (4.16.2007) to over $33
Fonar Corp. ( FONR ) (52 week range 17.20 - 33.90),
now at $29.20. I first started following
Fonar in 1982 and have followed it every day since. Great products would
be the reason to own this stock. The current PE is only 10.21.
has been a favorite of mine for over 30 years. My buy at $.27 in 2007
led to over $27 before falling back to the $9 area but once there
the stock moved up and over the $33 area last November but fell hard again hitting a low of $22.65 a week later.
recently announced an increase in revenues & earnings and the stock moved up to over $29 and too high to buy.
No matter how much I like the stock entry is best if under $20. Lighten up when over $30.
Best entry is under $20 !
Up From $22.10 to over $30 since February
Comtech Telecommunications ( CMTL ) (52 week range 13.11 - 31.40), now at
$30.30. Our original buy under $4, in 2003, carried
all the way to over $50 and split twice along the way. CMTL is a stock
to own for the long term.
buy under $10 last November has worked quite well, however in lieu of
the overvalued markets taking some profits might not be a bad idea, but
hold the rest for the long term. The current PE is high at 28.06.
In closing I would like to mention that one of the worst things we can do is buy stock in a young penny stock company that has already issued, or is going to issue too many shares too low in price.
market makers love too many shares as it keeps the price low making it
possible to short millions of shares, which prevents the stock from
a quality small stock "to buy" with not too many shares owned, near the
low, will be very hard but once found the rewards can be plentiful.
If you have a situation, or questions, please feel free to contact me.
I wish you all good luck!
J.R. Budke became a stock broker in 1981, an options
principle in 1982 and a branch office manager in 1987 and a National
Sales Manager over 150 stockbrokers. He is currently
inactive as a stockbroker as of 12/31/99. J.R. writes the articles and
opinions for the Stocks in the Spotlight. The stories and stocks found on this
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opinions of J.R. Budke unless other wise stated, and should not be
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