Recapping The Week
Catching up on the news this morning I came across this article from Andrea Riquier detailing some often over looked economic contributors. The thing that jumped out at me was the prediction that improved household finances nationwide will help spur economic growth. I really hope this pans out but I'm usually hesitant to act quickly on these types of predictions because consumer behavior can let you down.
When gas prices dipped in the U.S. several months ago, it was widely believed that consumers would spend that newfound cash elsewhere in the economy. Instead, many people put that cash into their savings accounts. Repairing the savings rate in this country is a good thing, however, it's not what the market expected and therein lies the danger of predicting consumer behavior.
$LL Struggles and$LNKD Tumbles
Anyone that's invested in Lumber Liquidators recently has probably gotten stung a few times. Now that Q1 earnings have been released, it's clear that the once thriving company is in store for more hard times. In addition to a lack luster performance, the company is facing criminal charges from the DOJ. It's hard to believe that one of the darlings of the 2013 stock market is now trading at basically the same price it did in April of 2012.
In contrast to Twitter, most analysts are still high on LinkedIn but their 20% tumble this week is causing a lot of jitters in the market. Apparently, LinkedIn has seen a slow down in revenue from their recruiting products which is the reason for their stock price decline. With the slow recovery it's no surprise that recruiting products are struggling to perform. The good news is that there's a lot of agreement on LinkedIn's fundamentals and if/when there is a hiring boom again, they should be able to reap the benefits.
$ORLY Retraces
Earlier this week I was high on $ORLY but I felt like it needed to retrace before action was warranted. The good news is that it has, indeed, retraced to its buy point so it might be time for me to develop a trade plan for it. As it happens, 40% of IBD® stocks retrace to their buy point so I was comfortable taking a deliberate approach on this one.
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Best,
Amin
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