Week 4 2012 Performance...What a sick week

And when I mean sick I mean really sick.  For the majority of the week I was wiped out with the flue despite actually getting a flu shot for the first time in my life this year.  I guess I must have gotten a different strain?


Despite mine or anyone else's illness the market moves on and this week there was a lot economic news as I noted in the weekly performance from last week.  GDP came in at 2.8% just below consensus estimates at 3.0%, Consumer Sentiment Index for the end of January rose to 75 from a preliminary reading of 74 for the month and 69.9 at the end of December, according to sources who have seen the report.  The latest reading was better than the 74.5 expected by economists surveyed by Dow Jones Newswires, and New Home Sales in 2011 hit their lowest level on record (see graph below)





What did all of this mean for the markets?  The S&P 500 finished flat and the DOW broke it's 3 week winning streak ending the week lower.  Our performance was quite the contrary as the Fund finished up 2.8% vs. last week and is up 7.2% YTD.


The real leader in the portfolio this year has been OI.  OI reported a wider overall loss this week for Q4 but core operating earnings improved and were a couple cents better than estimates.  The company forecasts a better 2012 as well as announcing that the CFO will retire in Q2.  The stock has been on a staight line up almost since bottoming around 1$17 to $18 in November & December.  BMW has been no slouch either up nearly 28% for the year.  We pretty much got in at the bottom of this stock and it is not getting close to hitting it's first big resistance test.  I've got a stop loss in place to make sure we capture a good majority of our profits.  The option side of the fund had a solid week posting a gain of 3% led by Buffalo Wild Wings, Research in Motion, and Crocs.


The real stock news this week was the blow out and I mean blow out numbers from Apple.  Typically Apple smashes earnings estimates to begin with but even if you took the most bullish estimates they blew those out of the water.  The key in one word....iPhone.  The company sold 37 million iPhones in the last quarter.    Apple registered earnings of $13.1 billion, or $13.87 a share, up from $6 billion, or $6.43 a share. Revenue surged 73% to $46.33 billion. About 58% of revenue came from international sales.  Currently we own call options on Apple.


So what does this week bring?  Hopefully for me a clearer head as the flu exists my system.  Markets are up anywhere between 4% and 5% this year but we are only one bad European rumor away from a big down day that could take with it much of the year's gains.  I feel like a broken record stressing caution and more caution but something still feels amiss with this rally with is now up about 20% since the November lows.  That is a sizable move in a short amount of time.  However, you can't go all out either in case things continue to climb which is why we are using our capital very strategically.


Have a good week