Happy Friday! What a week it's been. We got a 180 degree turnaround on Syria, we pretty much concluded Larry Summers is going to be the next Fed chief, Twitter announced an IPO, Carl Icahn gave up on Dell, and August's retail sales rolled in much weaker than expected. It's a lot to take in.
You know what though? It's all packed into - and priced into - the charts, so we're going to keep the focus on the hints our charts are dropping as to their bigger direction.
That direction is bullish, by the way... at least for the time being. But, it became pretty clear to me this week that the market is little more than a roulette wheel right now. There's no rhyme or reason with the market's action. It's all news-driven and perception-driven. It just so happens that traders have been working hard to keep wearing their bullish-colored glasses. Right or wrong, if that's the trend, then that's the trend. And, that is basically, even if barely, the trend at this point.
I'll confess I'm a little surprised to be saying that to you today after yesterday's stumble. But, charts don't lie.
Take a look at the daily chart of the S&P 500. It wasn't a huge move, but an important one. It stopped a pullback before it had a chance to get going, which may seem like a small deal now, but could end up being a game-changer early next week.
With all of that being said, you should still know the market ultimately remains on the fence. The S&P 500 really needs to move back above the upper Bollinger band at 1692.45 (or at least the recent ceiling around 1689) to get back into a bullish mode. On the flipside, the bears need to take the S&P 500 under the recent floor at 1681 if they really want to get the ball rolling past the point of no return.
I'm not surprised to see the effort from both sides of the table wind down as the weekend approached, though I've got a feeling it's going to crank back up again and rock the market out of this rut when trading resumes on Monday. We'll check in again then.
A Closer Look at Aegion
Looks like our introduction of Aegion (AEGN) - the parent of water-pipe repair company Insituform - from Wednesday stirred up some interest. So, as promised, we'll tell you a little more about the organization.
Just as a quick refresher, Insituform is the inventor and installer of a product called Insituguard, which is simply a plastic tube that's pushed into a crumbling concrete water pipe and then heat-cured into place to seal any leaks. It's an ultra-cool idea that dovetails nicely into our whole water-infrastructure-repair boon for companies that can provide a real solution.
Our only problem with Aegion is that is isn't a pure water-pipe repair play. The company has other infrastructure maintenance and design divisions under its umbrella. Those other business lines are fruitful too, but somewhat dilute the water-centered upside.
So how do Aegion's revenue and profits break down by division? Take a look at this snapshot from its most recent SEC filing.
As you can see, about half of the company's total revenue and earnings comes from water-related stuff. Perhaps equally interesting is the fact that it's generating operating profits (or close to it) on all fronts.
You're not paying a bad price to participate in those profits either. AEGN is priced at 17.6 times its trailing earnings, and only 11.4 times its projected 2014 income. And, as the image of the earnings trend from cnbc.com describes, the growth track is an attractive one.
Still, as impressed as we are by the company's track record and its pipe-repair solution in particular, we're still not ready to put Aegion into the SCN portfolio. We might do so later, though, so stay tuned.
Picks (Stocks, and Teams)
Last but not least, we haven't had much of a chance to show you some of the site's best write-ups this week, so we're going to make a point of squeezing it in for you today. Real quickly...
Gold and silver have been drubbed pretty badly of late, but Bernanke may be about to unveil something that will turn that ship around. Jonathan Yates explains how it may happen.
Looking to diversify your financial exposure by going global? John Udovich takes a close look at four financial ETFs that tap into the sector in regions everywhere except the United States.
Finally, he acknowledged it wasn't going to be a popular opinion, but it looks like James Brumley's short-term call on Venaxis (APPY) is going to be spot-on.
One more thing for this week, especially if you're a football fan... last year we had a lot of fun - and some pretty good luck - handicapping some of the NFL's biggest games. So, back by popular demand, we're thinking this weekend it's going to be the Saints minus 3, and Lions minus 1. They should both be great games.