Brooksie’s Daily Stock Market blog
Wednesday, September 14, 2011 9:44 am EDT
DJIA: 11,061.12 S&P 500: 1162.27
Friday is Quadruple Witching Day when all four stock index options, futures, stock options, and single stock options expire. Historically, Quad Witch has been characterized by volatility. According to the Stock Trader’s Almanac, 7 of the last 8 September Quad Witch Fridays have been gainers.
I often refer to the Big Money as a mover of markets, working in before bottoms and out before tops. I suspect it has been buying between DJIA 10,600 and 11,000, BUT NOT reaching enough to blow the market up out of its one-month consolidation pattern of DJIA 10,600 – 11,700 (S&P 500: 1100 – 1220).
What are they waiting for ?
Probably for one more leg down, triggered by a worsening of Europe’s debt woes, a further slippage in the U.S. economy, or failure of the 12-member SuperCommittee to put partisan politics aside and get the job done it was assigned.
Do great buying opportunities just sit there allowing all investors to jump on board ?
Is there enough fear here to provide capitulation where buyers overwhelm sellers and run the table ?
Clearly, we have reached the “ouch” point, but do we need more pain before a bottom sets in ?
As just about everyone knows, two issues need clarification before the stock market can regain traction – the euro-zone debt crisis and our economy. If the Big Money anticipates that happening, it will reach for stocks.
Most of all, what is needed, is for the 12-member SuperCommittee to function efficiently and in a non-partisan way to address deficit reduction. Congress must get behind President Obama’s American Jobs Act, or propose ways to improve its impact. More obstruction will hurt the economy and stifle a renewal of the bull market.
Today: Up at the open with resistance starting at DJIA: 11,325 (S&P 500: 1195).
Infrastructure Spending: Housekeeping 101
Note: I will repeat this section from time to time for new readers.
As the recession and bear market were intensifying in the fall of 2009, I speculated that infrastructure spending would get a high priority for a recovery. I wrote articles for Equities Magazine and compiled information I anticipated would be useful.
I was wrong, infrastructure spending got a low priority, and today I am sure the administration has its regrets.
What is attractive about this kind of spending is it stands to employ a lot of people and it can be funded by some government spending, but to a great degree by private investment.
When I did my initial research on the nation’s infrastructure I was surprised to find it encompassed 15 different categories: Aviation, Bridges, Dams, Drinking Water, Energy, Hazardous Waste, Inland Waterways, Levees, Public Parks and Recreation, Rail, Roads, Schools, Solid Waste, Transit, Wastewater.
In 2009, the American Society of Civil Engineers gave each category a “grade” (A through D-)
I was shocked to learn the GPA for all categories averages a “D,” with an estimated need for investment of $2.2 trillion !
Their 140 page study is available on the following web site. (Some pages are in full color, so copy with care or it’ll chew up your color ink)
These infrastructure categories encompass most of the United States. Addressing their vast deficiencies would employ a significant number of workers at all skill levels for many years. Every politician in both Houses should drool at the potential in the districts they serve.
With all categories of our infrastructure begging for attention, it is beyond comprehension that our nation’s priorities are squandered abroad. Time to come home.
There is a move afoot to establish a facility for funding infrastructure projects sponsored by Senators John Kerry (D), Mark Warner (D) and Kay Bailey Hutchison (R). The vehicle would be the BUILD Act, introduced earlier this year by Senator Kerry and modeled after the Export-Import Bank Created during the Great Depression.hgh
Whether this will be a facility for funding infrastructure investments is unknown. Whether Congress approves additional infrastructure spending is unknown. I thought the following information would be helpful in the event our government decides to pursue this route for job creation while addressing an enormous need.
So what’s the best play ? An ETF may sound like an easy answer, however one of the problems with Infrastructure ETFs is they are generally loaded with utility stocks, ergo not pure plays.
I compiled a list of 39 stocks (not recommendations) with exposure to various categories of infrastructure spending. but have not crunched numbers – a massive job and I currently don’t recommend stocks. But, this is a start.
There is no guarantee that the government will address the issue, or that any of these companies will benefit enough to have a significant impact on its stock. Eight of the ten largest highway builders are privately owned.
For the most part, these are meat and potatoes companies, NOT alternate energy companies.
ABB Ltd. (ABB), Aecom Tech (ACM), Alamo Gp (ALG), Ameron Int’l (AMN), Astec Inds. (ASTE), AZZ Inc. (AZZ), Caterpillar (CAT), Chicago Bridge & Iron (CBI), Cemex (CX), Colfax (CFX), Deere (DE), Dover (DOV), Eaton (ETN), Emcor Gp. (EME), Gardner Denver (GDI), General Electric (GE), Gorman-Rupp (GRC), Granite Const’n (GVA), Idex (IEX), Insituform Tech. (INSU), Jacobs Eng. (JEC), Joy Global (JOYG), KBR (KBR), Layne Christensen (LAYN), Lindsay (LNN), Manitowoc (MTW), Martin Marietta (MLM), Mastec (MTZ), MYR Gp (MYRG), Pike Electric (PIKE), Primoris Svcs (PRIM), Shaw Gp.(SHAW), Sterling Const’n (STRL), Terex (TEX), Thompson Creek Metals (TC), Transcanada (TRP), Unites States Lime & Mnrls (USLM), URS Corp. (URS), Valmont (VMI), Vulcan Materials (VMC).
The writer of Brooksie’s Daily Stock Market blog, George Brooks, is not registered as an investment advisor. Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. Readers are expected to assume full responsibility for conducting their own research pursuant to investment decisions in keeping with their tolerance for risk