Bernanke Put Irrelevant?

Kevin Cook here for Steve the rest of this week as he takes some R&R...

They came. They heard. They cried all the way home. The weak bulls that is, who, after reading Ben Bernanke's prepared remarks before his Senate testimony, ran for the exits on fears that QE3 isn't coming after all. Then, before you could say "low volume rally" it was the bears' turn to feel sick as the market reversed and ramped from S&P 1345 to 1365 in a few hours.

The constructive technical picture that the S&P has built since the June lows keeps feeding on its own strength. Two weeks ago as the index headed toward support at 1330, I warned that this may merely be the "shake-out before the break-out" to new post-correction highs above 1375. So far, the bulls still own the field in the rising price channel as they plan the assault on the next resistance levels.

But something else is going on regarding the fundamental picture. While the economic data has certainly been weak and earnings have been a mixed menu of bland to sour, the sentiment about whether we need or want more QE any time soon has shifted. It's as if market players are relieved we don't desperately need it and we can fearlessly put the spotlight on Congress for their second shot at budget-wrangling stardom... or disaster.

Whether or not our politicians can actually make good and tough compromises, pro equity investors seem to be looking past a lot of our current headwinds. It's as if they see 2011 all over again, but without the unnecessary cascade of stock prices. Last year we didn't go into recession and Europe didn't implode.

So the playbook of portfolio managers is this: "Stocks are by far the most attractive investment vehicle in the land, and their downside risk is likely tolerable. But we cannot afford to miss the upside."

For more on this bull-bear debate, be sure to check out the economics conversation we started on whether or not this summer will be a "3-Peat" of the last two. You can find it on the Real-Time Insight blog at "Fool Me Thrice?". Our Chief Equity Strategist and resident quant John Blank offers some compelling arguments for higher stock prices.

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Best,

Kevin Cook
Senior Stock Strategist, Zacks Investment Research

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

ZACKS RANK BUY STOCKS

• Aggressive Growth - Lamar Advertising Co. (LAMR) Zacks Consensus Estimates for 2012 and 2013 each went up by a penny to 18 cents and 62 cents, respectively. This is year-over-year growth of 822.7% for 2012 and 235.0% for 2013. Read More...
   
• Growth & Income - URS Corporation (URS) analysts have made significant upward revisions to their estimates for fiscal years 2012 and 2013, helping the stock achieve a Zacks #2 Rank (Buy). Read More...
   
• Momentum - Santarus (SNTS) has constantly outperformed the S&P 500 since the beginning of this year. The year-to-date return for the stock is approximately 127.6%, compared with the S&P 500's return of 6.0%. Read More...
   
• Value - Penske Automotive Group (PAG) reported first-quarter earnings that outstripped the Zacks Consensus Estimate by 14.6%. With a price-to-sales ratio of just 0.18, this Zacks #1 Rank (Strong Buy) is a true value pick. Read More...
   

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

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• Bear Of The Day: NuStar Energy, L.P.
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• Zacks Industry Outlook: eCommerce Stock Outlook - July 2012
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• Analyst Blog Highlights
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• Petrobras Inks Rig Deal
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• Aggressive Growth Stock Picks-Jul. 17, 2012
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PeopleAndPicks.com:

VIP "rjm77me" is finding profit in his recent BUY calls of (HES), (MFC), (OIS) and (UNH). Read More...

• Bernanke: Libor system is structurally flawed @ CNNMoney.com
• Intel Gets Earnings Beat But Lowers Guidance @ TheStreet.com
• Does the Economy Need More Stimulus? @ FOXBUSINESS.com
• Yahoo keeps ads flowing despite struggles @ MarketWatch.com

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