4th "E" Boosts the Market

Previously we talked about the 3 E's affecting the market (Europe, Economy & Earnings). However, there is clearly a 4th one that needs to be added to the mix: East Asia. (Really I mean China, but that doesn't start with an E ;-)

So what happened there to move stocks on Tuesday? They reported 4th quarter GDP of +8.9%. That does show a little slowing from the past, but was certainly better than expected. Here again, talks of the demise of China seem quite premature. That is most definitely true for a country that has tons of stimulus ammo at the ready if need be.

Europe was the other main "E" in the news today. Lower bond ratings haven't scared away investors as bond rates continue to drop. That confidence has spilled over to their stock markets which are at their highest levels in 3 months.

Now with all of this good news you would expect me to be a tad more bullish. However, we have been rallying pretty hard since the late November lows. And with the problems in Europe not being 100% contained there is a limit to how much further we can climb at this time.

My guess is that we might consolidate here around 1300 on the S&P until either earnings prove to be impressive or Europe moves closer to containment. That is the short term picture. Looking out to the year ahead, I still see more upside as the Muddle Through economy becomes the greater driver of stock prices and thoughts of a European implosion can barely be seen in the rear view mirror.

That is the same outlook our analyst team took to assemble our coveted Top 10 Stocks portfolio. These are our favorite buy and hold picks to outperform in the year ahead. And today that list of 10 stocks is being released to the public. I hope you check them out now.

Zacks' Top 10 Stocks for 2012

Best,

Steve Reitmeister
Executive VP, Zacks Investment Research

Today's Top Stories: Wednesday- January 18, 2012

ZACKS RANK BUY STOCKS

• Aggressive Growth - IAC (IACI) analysts have been consistently move earnings estimates higher for FY 2012. At present, the number has move higher by more than 52% to $1.95. Read More...
   
• Growth & Income - CubeSmart (CUBE) Zacks Consensus Estimate for 2011 is $0.63, representing 23% growth over 2010. The 2012 consensus estimate is currently $0.71, corresponding with 14% growth. Read More...
   
• Momentum - Dollar Thrifty Automotive Group, Inc. (DTG) with a new CEO, great rates and increasing demand, may be poised for another strong year after rising 53% over the past twelve months. Read More...
   
• Value - Prestige Brands Holdings, Inc. (PBH) in addition to a forward P/E under the 12.4 average for the S&P 500, has a price-to-book ratio of just 1.4. A P/B ratio under 3.0 usually indicates value. Read More...
   

Learn how to profit from our exclusive Zacks Rank stock-ranking system with free resources. Read More...

• Top 5 Growth Mutual Funds Read More...
• Top 5 Putnam Mutual Funds Read More...
• Mutual Fund Homepage

• Bull Of The Day: Celgene Corp.
  Full Zacks research report: Read More...
  
  
• Bear Of The Day: Darden Restaurants, Inc.
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• Ahead of Wall Street
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• Zacks Industry Outlook: U.S. Banks Stock Outlook - Jan. 2011
  The potency of the sector is not expected to return to its pre-recession peak anytime soon. The economic intricacy may even result in further disappointments in the upcoming quarters. Read More...
  
  
• Analyst Blog Highlights
• Accenture to Build French G-Cloud
• LaSalle Buys Assets in New York
• CNI Gets Land for Memphis Park
• Full Analyst Blog

• Earnings vs. Europe... Still
• Stock Picks for Trucking, Tractors, and Trillions in Derivatives
• Calendar Call Spread: A Neutral to Bullish Strategy

PeopleAndPicks.com:

VIP "MightyMo" is gaining profit with BUY calls in (ISRG), (PCLN), (WFC) and (YUM). Read More...

• Stocks end higher on strong economic data @ CNNMoney.com
• Jerry Yang Resigns from Yahoo! Board @ TheStreet.com
• Citi's Paper Gains @ FOXBUSINESS.com
• News Corp. acquires a stake in Dubai-based MOBY @ MarketWatch.com

SCREEN OF THE WEEK: Top Stocks with Big Potential Catch-Up Moves

Kevin Matras shows how to find the top stocks in the top sectors with the biggest potential for a catch-up price move. Highlighted stocks include BPO, FISV, HALO, JEC and MKTX. Read More...

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