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Zacks #1 Stocks on the Move 06/18/2013

Company Name Symbol %Change
STAAR SURGIC STAA
10.98%
LUMOS NETWOR LMOS
5.70%
INSTEEL INDS IIIN
5.28%
ERICKSON AIR EAC
5.10%
ASSURED GUAR AGO
4.98%
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Dear Subscribers,

The ISM Manufacturing survey showed a strong reading of 61.4 with great news for the jobs picture. And Bernanke was more upbeat about the economy enjoying a self sustaining recovery. So that clearly means the stock market was up on Monday, right? WRONG. The S&P 500 fell -1.6%. Why? Because of the potential of this equation to unfold.

Middle East turmoil = oil price spikes = unexpected tax on the US economy to pay for the oil = slower economic growth = lower corporate profits = lower stock prices

How serious is this threat? Right now at about $100 per barrel it is only a modest concern. At $120+ it becomes much more bothersome because it is said that each $1 increase in oil prices becomes a $10 billion tax on the US economy. So rising $20 per barrel would create an unwelcome $200 billion tax on our economy. I still believe that the trading range is intact at Dow 12,000 to 12,400, but if you don't already have some oil stock exposure in your portfolio, then better get some now.

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Best,

Steve Reitmeister
Executive VP, Zacks Investment Research

 

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