Strength in Shipping and King Clunker

Shipping stocks are often considered an accurate gauge of economic growth. When business is expanding, more packages, goods and raw materials get shipped. So the fact that FedEx raised current quarter earnings by as much 50% and next quarter by as much as 32% is significant. Of course, some of the gains will be achieved by cost-cutting and lower fuel bills, the company cites strong international demand as contributing factor for the improved earnings outlook.

*****And if we check another important measure of strength in shipping, the Baltic Dry Index, we see a recent consolidation at 2400, and a move to the upside.

The Baltic Dry Index (BDI) tracks lease rates for cargo ships. It’s a pretty straightforward indicator - when demand is improving, rates rise and so does the BDI.

Shipping stocks have been rallying over the last week or so, too. My favorite shipper, and former SmallCapInvestor PRO stock Genco (NYSE:GNK) is up 15% since September 2.

*****Part of the reason for the renewed strength in shipping is China. China reported today that it’s on track for 8% growth this year. Lending and investment remain strong, as we know. But industrial output and retail sales are also both reported strong.

Demand from the consumer is the one thing that will keep China‘s stimulus spending and lending from forming asset bubbles. Of course, the outcome is by no means certain. But in the meantime, China‘s strength is a strong catalyst for global economic recovery.

*****Wells Fargo (NYSE:WFC) downgraded the King of Clunker Stocks this morning. Of course I mean AIG (NYSE:AIG). I suppose Wells Fargo is doing their clients a service by piling on AIG. But really, why bother? I mean is there anyone out there that doesn’t realize AIG is a dead stock walking?

*****It’s always nice to hear that Daily Profit readers are listening, enjoying my daily thoughts, and even making some money from some of them. So it was great to hear from George, who responded to my question about Jazz Pharmaceuticals (Nasdaq:JAZZ) :

Hi  Ian,

Your question about JAZZ.   Scaled in 9/2 and 9/3, then sold early on 9/4 for $1.07 gain per share.  Thank you very much.

My question; what is your target for MTSN.   Short term profits, then re-enter? 

Also, comments for oilsands  BQI  ? 

Best regards,    George.

You’re welcome George. Glad you made some money on JAZZ. As for Mattson Technology (Nasdaq:MTSN), it was not me that recommended that stock. Though I wish I had, that chart looks great!

And as for Oilsands Quest (AMEX:BQI), I haven’t watched it intently since we took profits in SmallCapInvestor PRO some months ago when oil was running up this spring, but it seems to not be tracking the strength in oil prices well. That’s a concern. On the other hand, the chart looks pretty good, with support established around $0.90 a share and an ongoing breakout to $1.00.

I’ll spend some time checking out the latest here and let you know next week.

*****Monday is almost here! That’s the day my first book The Small Cap Investor: Secrets to Winning Big with Small Cap Stocks. Of course, I wouldn’t let this momentous event pass without a Special Offer to my loyal Daily Profit readers. I’ll fill you in on the details Monday…

*****Here’s TradeMaster Daily Stock Alerts’ Jason Cimpl with his weekly market forecast video. Click here to view his thoughts on the market action for next week.

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