Hotline Portfolio Approach November 29, 2013 The market, naturally, had a quiet low volume session as the traders who did come to work may still be feeling the tryptophan from the turkey. That upside bias seemed to hold most of the day but a late
selloff resulted in a slight down-day. Interestingly, there did seem to be some element of the QE trade today as gold was up more than 1% and 30‐year Treasury prices were down more than 1%. The real action today though is in retail land, where roughly 20% of all retail spending for the year is expected to be spent this weekend through Monday. Needless to say, the stakes are high and retailers have been up for the challenge by keeping their doors open yesterday and offering the best deals possible. There’s a measure of caution that this year is shaping up to be softer than last year but overall there remain some question marks. We’ll get more and more hints over the next several days. Have a great weekend, ‐WSS Research Team Our Goal and Approach The Hotline isn't a tout sheet; its purpose is to position investors ahead of the crowd in a balanced portfolio of ideas selected mostly through fundamental analysis. New subscribers can pick up existing ideas that haven't advanced too far and will be assisted by their representative and research desk, and I will assist as well. I don't expect or want subscribers to pick up each idea. From time to time, we will ask subscribers to short (you MUST go short or have exposure to the downside from time to time to make money long‐term) a stock and adjust cash as warranted by market conditions. We aren't trying to beat the market day to day, but over periods of 3 to 6 months and year to year. We are here to help in every way. We want you to have faith and follow our work and guidance. The service is designed to be tailored to each individual with respect to goal and temperament, but we are not going to avoid asking subscribers to invest in certain ideas because they are always worried or afraid. That’s why we do the work. The numbers in the first column are weightings – investors should have at least the number of positions in the weighting scale in their portfolio (in portfolios of $200,000 or less). For instance, if the sector has a 2 rating, we are overweight the sector, so investors should have at least 2 positions. We also want to make sure that investors are buying in equal dollar amounts (not share count); it helps to make sure one small loser doesn’t wipe out a GRAND SLAM. If the weighting is bold and underlined it means a change has been made to the weighting. Note on Ideal Cash Position: You do not have to have the exact amount we have as 20%+ ideal, but you should be following the direction of our cash position window. The Ideal Cash idea behind having more cash is for protection and also to buy dips, so don’t raise Position cash and head for the hills. 1 Symbols in bold and that are underlined are still buys for new and current subscribers. Make sure to put all of your positions in our Tracker, it helps us learn more about you as one of our goals is education, and it also gives us the ability to do more effective handholding. Core holdings are investments that we think can be held for very long periods of time, which means we will forgo tempting chances to take profits and will ride out dips. But, these are retirement names for those so inclined. If you are fully vested or have any questions, please touch base with your representative. Alerts for today:  Morning Hotline Idea: No Stock Idea Recommended  Afternoon Hotline Idea: No Afternoon Hotline 2 U.S. ECONOMY Sector Consumer 2 weight Core Holdings MJN Ideal Cash Position: 20%+ Subsector Stocks
Today and this coming Monday are huge for the retail world, and will account for roughly 20% of all US retail spending this year. Likewise, the financial world has its eye closely on shopping activity. Housewares & PIR
PIR’s CEO reportedly sold 14k shares on Accessories Monday. MJN is back to testing resistance at the $85‐86 Foods UMAM, level. MJN UMAM fell to a new low but bounced back to end higher for the day. Apparel CACH, NKE Now that NKE is part of the Dow, the market’s spotlight will be on its Holiday performance; it should be very good. CACH continues to move along $5 support. Auto GT
Kelly Blue Book sees this weekend boosting November sales 4% above October. Luxury TIF
In the last week, since earnings, the consensus FY15 EPS estimate for TIF is up $0.12 to $4.23. Restaurants RUTH
The restaurant sector hasn’t been great in the past quarter but fine‐dining has been an exception including earnings from RUTH, Del Frisco’s and Bloomin’ Brands. Sporting Goods CAB
Contrary to many others, CAB didn’t stay open
on Thanksgiving but we expect it to have a great Black Friday, it’s a go‐to brand for its market.
Personal Products AVP, KMB RBC started AVP this week with a hold rating
and $16 target. Electronics HAR
HAR’s car infotainment business is where the big growth should come from, but we also like its new focus on home equipment retail with its first US store in New York. Department Stores JCP
Today could be an important day for JCP’s future, it needs to get the holidays right this year. They say they’ll be hiring 25k holiday workers. 3 Sector Subsector Stocks
Transportation Crude oil futures may have been responsible for the dip in the transportation space 2 weight as the price per barrel jumped about 1%. The biggest winners were the bulk shippers, all trading significantly higher as analysts expect better pricing and volumes for the first half of the year. Auto Parts JCI
JCI traded slightly higher today with relatively light volumes; the company will be hosting their Analyst Day on December 18th. Shipping DSX
Dry bulk shipping rates as measured by the Baltic Dry Index are up 16% in the past four days. Trucking ABFS
Recent spikes in the stock price has caused ABFS’ PEG ratio to jump to 6.81 – much higher than the S&P 500 at 1.96. Recreational WGO
Shares of WGO declined slightly today on light Vehicle volumes; the company will report earnings again on December 19th. Sector Energy 1 weight Subsector Stocks
Despite this week’s increase in the U.S. average retail price of regular gasoline to
$3.29 per gallon, gasoline prices remain near the lowest level of 2013 or last year at this time. Oil & Gas WFT, EOG
EOG is scheduled to report earnings on Feb. 13 after market. Sector Technology 2 weight Subsector Stocks
Technology stocks were mostly higher today, aided by gains in shares of Microsoft Corp., Facebook Inc. and Apple Inc. Semiconductors SPIL, SPWR, CCMP is scheduled to report earnings on Jan.
GTAT, CCMP 23 before market. Business Software TIBX
Co will be attending the Gartner Application & Services Architecture, Development and Integration (AADI) Summit on December 3. Computer Based SSNI
Next earnings release: Jan 29 after market.
Systems 4 Sector Services 1 weight Subsector Stocks
With holiday shopping going more and more online, IT and transportation services supporting it are increasingly needed as opposed to brick and mortar stores. Travel & Leisure OWW, Credit Suisse notes that Macau‐related gaming LVS, stocks like LVS could underperform the Hang MGAM Seng market, but only due to a lack of big catalysts in the near term. Storms on the East coast have affected travel but aren’t likely to hurt the likes of OWW. Security & TYC
In the last week the consensus FY14 EPS Protection Services estimate for TYC is up $0.01 to $2.53. Rental & leasing HTZ
The next month is big for HTZ as people travel Services for the holidays; low gas prices could make rentals more attractive. GDOT could be boosted by both increasing Business Services ODP, online shopping (which requires cards) and GDOT decreasing tolerance for bank fees. ODP drifted higher on very light volume. Sector Subsector Stocks
Medical/Science The healthcare sector traded slightly higher today but in‐line with the broader 1 weight market. Overall there were no sizable gainers or losers on news or earnings; the biggest loser today was Thortec (THOR) after the New England Journal of Medicine published a study noting that THOR’s HeartMate II actually caused an increase in the number of blood clots found in patients. Laboratories DGX
ISI noted that the Center for Medicare and Medicaid Services updated the rate for independent lab reimbursements, which came in at a reduction of ‐5% compared to the initial estimate of ‐26%. This could mean a slight financial relief for DGX; though the savings may be offset by further lab spend. Appliances & ISRG
The 52‐week chart for ISRG has been looking Equipment grim lately as the stock struggles to maintain a level above its 50‐day moving average. Sector Agriculture 1 weight Core Holding MON MOS Subsector Stocks
The U.S. Agriculture Department says that the preliminary winter wheat price is down slightly in South Dakota. Chemicals MOS, POT, MON will be attending Citi Basic Materials MON Conference on December 4. 5 Sector Industrial 3 weight Core Holding JOY Subsector Stocks
Over in Japan, industrial output was reportedly up 0.5% in October, following another increase in September. The increase was supported by machinery used for making computer chips, plastics and cell phones.
Metals & Minerals
PAAS, BTU, Electricity prices are exploding and the global CLF, FCX, X economy is building traction. CLF looks set for a nice rebound. Precious metals moved higher, with silver up more than 2%, helping PAAS and FCX. Machinery & JOY, CMI,
Natural gas prices have risen approximately Equipment CAT 13% this month, which is typical of the winter months, but it’s close to breaching $4 which is roughly where coal becomes more attractive. 30‐year Treasury bond prices were down 1.4%, Housing DHI, TOL,
lifting rates higher, and homebuilders like DHI MAS and TOL could have had a worse session in the end. MAS is back to testing resistance at the highs. Waste CLH
CLH may have found support here around Management $52.50, which would be big as the action lately has been discouraging. Metal Fabrication GHM, GTLS slid recently because of its quarterly
GTLS results, but that’s not the proper way to measure the stock, which is investing heavily for its huge long term potential, thus it looks cheap at this level. GHM was flattish on the day with very little volume. Specialty GNRC
GNC pushed to a new closing high. Equipment Chemicals DD
DD is up 41% year to date, which well outpaces the market, and importantly competitor Dow Chemical. Global Economy Sector World Markets 1 weight Subsector Stocks
China is facing significant environmental and social challenges that must be addressed if it is to achieve its sustainable development goals, according to a joint report released by the United Nations Environment Programme and the Government. CTRP is scheduled to report earnings on Jan. 30 China CTRP, BIDU, SINA, EJ, LFC after market. India IBN
Shares of IBN were up 2.67%. Latin America MELI
Next earnings release: Feb 25 after market.
6 Hedges Sector Precious Metals 1 weight Subsector Stocks
Gold has already lost 6% of its value this month, fuelling market speculation that it could end the year worth less than its price at the start of 2013. Gold GLD
SPDR Gold Shares were up 1.10%. Profits Taken in November Ticker ADES KORS FIVE ATK SKS % Gains 37.93 8.47% 6.66% 21.39% 4.85% Entry Date 9/11/2013 10/16/2013 10/21/2013 7/24/2013 7/26/2013 Exit Date 11/26/2013 11/19/2013 11/15/2013 11/7/2013 11/5/2013 Losses Taken in November Ticker VELT % Loss (99.14%) Entry Date 5/16/2012 Exit Date 11/4/2013 WWW.WSTREET.COM
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