The Market Bounces Back Above Key Support

Before I get down to some commentary on the S&P 500, I'd like to go over some of the enhancements I made to Stocks That Rock!

I added some additional features today:

The Daily Dose gives you a feed of music videos from specific artists that I choose. Today's featured band is The Clash. Once dubbed "The only band that matters," the Clash has been a major influence on many rockers of today.

If you have any requests for specific bands you would like to see on The Daily Dose, let me know.

I also added a video feed called School of Stock. The School of Stock provides some videos on investing basics. You might find them helpful. Again, if you have any comments or requests in this area, send me a note and I'll see what I can do.

Finally, I added a news feed on Music Industry News. I may change the subject of the feed from time to time.

OK, now let's get to the markets. I chose to take a look at a daily chart of the S&P 500 today. Take a look at the following chart, and I'll give you my take on what's happening:



As you can see in the chart, the S&P climbed 36.63 points yesterday and closed above key support around 1,461. This is a good sign of strength in the market, and it took the doom-and-gloomers by surprise.

Whether the correction is over or not is impossible to say, but the market looks like it could build a nice base of support here.

The best advice I could give right now is to hold onto your positions and remember to always stick to disciplined sell stops. As the market rises, bump the sell stops higher accordingly and try to lock in gains.

As for buying, I would hold off right now and wait for the market to settle down and confirm that the correction is over.

Have a rockin' day.

There's No Need To Fear, The U.S. Economy Hasn't Been Eaten By The Bear

Here we go for another week. I hope you had a great weekend. I did. Not only did I get to spend time with my son (we went to the movies to see Underdog), but I also got to play lots of guitar.

On Friday night, I plugged in my Les Paul and practiced Head On by the Jesus and Mary Chain. I love that song; the Pixies do a great cover version. I also worked on Bruce Springsteen's The River, another great song.

Now it's back to the grind, and I am here at my desk trying to make sense of what's going on in the markets.

Here's what I think:

There are a lot of “Chicken Little” pundits claiming the U.S. economy is on the verge of catastrophe and that other major world economies are the best place to park your investment cash. What a crock!

They start by pointing to the mortgage meltdown that’s created a credit crunch that’s sending ripples throughout the markets. They also like to cite the lame performance of the U.S. dollar against other major world currencies.

I could go on and on about the fundamental problems in the U.S. economy and make a convincing argument that the sky of falling: massive debt, huge foreign trade imbalance, government spending gone wild.

The market is jittery and it should be. But it’s not the end of the world, and I am not putting nails in the U.S. economy’s coffin. What’s going on now is part of a natural correction in the market that probably won’t last too long.

Just take a look at the following weekly chart of the S&P 500. If you look at the chart and try to clear your head of all the rubbish you hear and read, the market uptrend remains intact. In fact, the S&P could lose another 73 points before I would start to worry.



I’m not saying it’s time to start buying up stocks or selling everything irrationally. What I am saying is it’s premature to be calling the beginning of a bear market, and it’s even more premature to claim that foreign markets are impervious to what happens in the U.S. markets.

Rock on!

Here’s a Company that Rocks! Kaman Corporation (KAMN)

Kaman Corp. (KAMN) is well known for its industrial technologies segment that distributes power transmission, motion control, material handling and electrical components and for its core business as a military helicopter manufacturer.

But this company also rocks as the largest independent U.S. distributor of musical instruments and accessories by offering more than 20,000 products for music professionals and aficionados.

Charles Kaman, the company’s founder, grew up with two passions: aircraft and guitars. What’s there not to like about this guy? In the 1930s, he competed in model airplane contests and became an adept guitarist. He even turned down an invitation to join the Tommy Dorsey band.

The rest is history. Kaman worked at United Aircraft, which was run by Igor Sikorsky. After United rejected some of his revolutionary design ideas, he pulled a rock ‘n’ roll move and set up his own company (in 1945) that built record-setting helicopter designs.

Sure rock ‘n’ roll hadn’t been born yet, but this guy rocked before rock.

Fast-forwarding to 1966, Kaman founded Ovation Instruments, which is well known for its use of composite materials and the “roundback” acoustic design.

On a financial level, KAMN’s stock has returned 57% so far this year and more than 94% in the past 12 months thanks to growing sales ($320 million in the second quarter). In the second quarter, the company raked in $10.1 million in profits, or 40 cents a share.

The aerospace segment grew sales by 31.5% to $97.8 million while the industrial distribution segment generated 2.4% growth to $176.6 million.

While sales in the music segment dipped a mere 1% to $47.6 million due to seasonal softness and overall market weakness, the fastest-growing segment in the company’s sales is the music distribution business.

At the end of 2006, KAMN’s music distribution sales saw an average two-year growth rate of 15.53%. This is good news for a company that rocks. What’s even better is KAMN is diversified into aerospace and industrial products. Diversity is good. When one segment softens, the others can pick up the slack and take care of shareholders.

Bottom line: KAMN rocks!