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The best news for a bull like me came from two surveys with vastly different views on the stock market. The worst news came on Good Friday, with the Yanks delivering the job numbers on a day when Wall Street was on holidays! More on that when I look at my “dislikes”.

The first survey looks at the newsletters of pros and experts and this Investors Intelligence report found those bullish went from 52 to 56.6. Those bearish were 14.1% and this was pretty constant.

Against this, the American Association of Individual Investors (AAII) survey found the bulls count at a low 27.2%, while neutral sentiment was 41.4%, which was way over the historical average of 30.5. What I found interesting was that Charles Rotblutt, editor of the AAII Journal, says that whenever there’s a low bulls number and an oddly high neutral reading, a better-than-expected stock market showing follows in both the six and 12 months after!

That’s the future. As for now, I think we’re in a holding pattern, until some more good news comes along to take us to the next level. Alternatively, it could be bad news, which might take us lower! Over the week, our stocks were down and then we went up, while the Yanks were up and then went down.

Economic data out this week locally confirms my view that the second half will produce a better economy and I’m really hoping the Reserve Bank cuts interest rates next Tuesday to ‘add a little water’ to the green shoots I’m seeing for our economy (see my likes below for a list of ‘goodies’ on the economy). Oh yeah, Treasurer Hockey could also add a little water too via a Budget that’s pro growth.

In case you missed it (I don’t think any regular reader of the Switzer Super Report could have), I think Europe is a good play for stocks. This week on my TV show, Bell Direct’s Julia Lee insists this is not a boat that has left the harbour yet.

Locally, we’re set to go higher, especially if we see another rate cut on top of the economic pluses out there. However, I also like US stocks – not as much as our market and Europe – but along with currency and a modest rise in stocks, the Yanks still look bankable.

As a consequence, I was happy to see Tom Lee of Fundstrat Global Advisers and S&P Capital IQ’s Lindsey Bell talking up US stocks on CNBC.

“I think we’re going to see some big gains this year,” Lee argued. “If you look at the last 30 years, the correlation between gasoline spending and apparel spending for 80% of households is essentially -1, meaning that if gasoline drops 50%, in the last 30 years, it was always a commensurate increase in entertainment and apparel spending.”

Meanwhile, Bell thinks cyclical stocks will be responsible for an earnings rally, despite some soft recent economic data that she thinks was, to a degree, cold weather related. With consumer savings at US$768.6 billion (or 5.8%), this is the highest level since December 2012, with the savings rate also rising to 5.8%.

You might recall last week I argued that the Russell 2000 index might be the one to play, as many of these companies are not exporters, instead selling to Americans so their sales won’t be affected by a higher greenback.

Monday’s data in the US was good and the Dow was up 263 points. However, it went south to the tune of 200 points later in the week, despite some OK economic data. Consumer confidence rose from 96.4 to 101.3 in March. The Case-Shiller Home Price index rose by 0.9% in January, to be up 4.6% on a year ago. The Chicago Purchasing Managers index rose from 45.8 to 46.3 in March and weekly chain store sales were up 3% on a year ago, up from a 2.8% annual gain in the previous week.

With economic news like that, you’d have to think it was the end of quarter profit-taking that drove the Dow down. As I said earlier, we’re in a holding pattern, waiting for something from the upcoming US earnings period, or a significant play from the Fed on rates, or a sign the American economy is doing better or worse than expected.

What I liked

• Bumping into Peta Credlin in Canberra airport on Thursday and she admitted to watching my TV program! She also left me with the impression that the PM won’t give up on his debt destruction goal but it could be a tad slower than what last year’s Budget promised and this year’s Budget will be more pro-growth. For her and Tony’s sake, it has to be.
• This from Charlie Aitken:“The lesson of the last few years remains to let winners run and be a ruthless cutter of losers. Winners keep on winning, losers keep on losing. As Warren Buffet says, very few companies can truly be turned around and you are better off paying a higher multiple for a great and enduring company. That remains sage advice in a low growth environment with heightened volatility.” As we have been backing great dividend stocks since March 2009 and they have rewarded us, I’m glad Charlie thinks this is still the way to go for SMSFers.
• The market view that there’s a 70% chance that the RBA will cut the cash rate to 2% on Tuesday.
• The Oz dollar at 75.9 US cents.
• The thought that Wall Street’s positive finish ahead of Easter could set us up for a post-RBA cut spike in stocks on Tuesday but the 101.4 points to crack 6000 might be too big an ask. This was a pre Good Friday view.
• The Chinese Purchasing Managers’ Index beat economists’ expectations to move into expansion territory, coming in at 50.1.

What I disliked

• I thought about saying there was “nothing I disliked” but then the US Jobs Report came in at 126,000 new jobs, when the consensus was 245,000! That’s a big miss and stock market futures were down big time, with the Dow futures off 160 points. This will give ammunition to those who say the US economy is going off the boil but it also means that the Fed’s first rate rise will be later rather than sooner and a delay could help stocks rise. There will also be a debate over the one-off unreliability of these March employment figures – it’s been a cold winter and this can play havoc with economic data.

Courageous call

Michael McCarthy of CMC Markets still thinks Fortescue is a good buy at these levels (see my interview with him on my TV show, which will be up on www.switzer.com.au after Easter, if you’re thinking about FMG).

He also likes Santos. Paul Rickard is toying with a Santos shot but isn’t sure if it’s too early. Macca is more confident.

Stop press

This bad jobs number could push the greenback down and the Oz dollar up and should put more pressure on the RBA to cut on Tuesday. The ‘making money on the market’ drama continues but personally I hope this job data is proved to be erroneous or transitory, as the US adjusts to a higher greenback and lower oil prices. As I say, the drama continues.

Top stocks – how they fared

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*Data at the close on Thursday 2.4.15

The week in review (click the blue text to read more):

• This week, I told you about three market killers that we need to get over to ensure stocks head higher.
• My colleague Paul Rickard said small companies may be set to do better and suggests getting exposure to this part of the market through listed investment companies.
• James Dunn explained why you shouldn’t despair after a share price dumping if you’ve done the right due diligence on a company’s valuation.
• This week, the brokers upgraded AGL, Echo Entertainment and Bank of Queensland. In our second broker report for the week, Caltex received two upgrades following the Chevron sell-down.
• Charlie Aitken told you why you should look to the ‘Nifty-15’ – that is large, buy-and-hold growth stocks that have led the broader ASX200.
• Tony Featherstone named Freelancer and Xero as two potential industry disruptors, with both showing good recoveries after heavy falls.
• Barrie Dunstan looks at history to show why recent iron ore increases were an anomaly, and says current prices might be closer to long-term prices, with only the larger producers to survive.
• And this week’s Fundie, PM Capital’s Ashley Pittard, explained why Visa is a priceless brand and a valuable stock.

What moved the market (click the blue text to read more):

• There was mixed data internationally, with US stocks lower after some disappointing releases for construction and manufacturing, while European stocks rocketed higher on the back of positive manufacturing data from China and the euro-zone.
• The Aussie market went lower mid-week as iron ore fell to less than $US50 a tonne.
• But lifts in other commodities, like gold and copper, along with expectations of a rate cut by the RBA next Tuesday, helped boost the local market on Thursday.

The week ahead:

Australia:

• Tuesday April 7 – New car sales (March)
• Tuesday April 7 – Reserve Bank Board meeting
• Tuesday April 7 – Retail trade (February)
• Tuesday April 7 – Job advertisements (March)
• Friday April 10 – Housing finance (February)

Overseas:

• Monday April 6 – US ISM services (March)
• Tuesday April 7 – US JOLTS survey (February)
• Tuesday April 7 – US Consumer credit (February)
• Wednesday April 8 – US FOMC minutes
• Friday April 10 – China inflation (March)
• Friday April 10 – US Trade prices (March)
• Friday April 10 – US Federal Budget (March)

It’s a short week after Easter, but Tuesday’s a big one with the RBA handing down its decision on interest rates – with many tipping a ‘sure thing’ rate cut to get this economy’s mojo going! Other important data to watch includes retail figures for February and the leading indicator for the jobs market – job ads – both out on Tuesday.

It’s also a slower week overseas, but there are still a few key economic pieces in the pipeline. The key gauge of services sector activity – the US ISM services index – is out Monday, while positive figures for US consumer credit on Tuesday would suggest improving confidence levels. The Fed is also in focus with the FOMC minutes released on Wednesday, and on Friday, monthly data on the Fed Budget.

Calls of the week (click the blue text to read more):

• Software company MYOB revealed its IPO plans this week, with the float to raise $833.8 million from new shareholders, with shares priced between $3 to $4 each. However my colleague Paul Rickard said you might be able to find better value elsewhere – check out his opinion here.
• April 1st marks that day for pranksters everywhere to stick it to the gullible, and this year was no exception with many leading brands and sites doing their bit to confuse consumers. Google turned its maps page into a game of Pac-Man, while Qantas announced it was including a U into its name i.e. “Quantas” – to overcome spelling issues, and Appliances Online said it had introduced a blimp delivery system!
• Clive Palmer made the call to launch legal action against former PUP senators, Jacqui Lambie and Glenn Lazarus, in a bid to reclaim the money he says he spent on getting the two elected – that’s $2 million and $7 million respectively!

Food for thought

If you are not willing to risk the unusual, you will have to settle for the ordinary.
– US businessman, Jim Rohn

Last week’s TV roundup

• Does economist Saul Eslake of Bank of America Merrill Lynch think the RBA will come to the Government’s rescue with another interest rate cut after Easter? Find out here.
• SSR expert, Paul Rickard, talks Fortescue and iron ore levels, and what the proposed bank deposit tax might do to shares.
• Bell Direct’s Julia Lee tells us what the big market moves have been as we approach the end of the quarter, and if there’s any positivity in sight for oil and iron ore.
• And is the tide turning for small caps? My colleague Paul Rickard and I explain why current economic conditions may start to work in their favour.

Stocks shorted

ASIC releases data daily on the major short positions in the market. These are the stocks with the highest proportion of their ordinary shares that have been sold short, which could suggest investors are expecting the price to come down. The table also shows how this has changed, compared to the week before.

This week, the biggest mover was Metcash, with its short position increasing by 0.92% to 17.09%.

Source: ASIC, latest data as of Thursday 2.4.15

My favourite charts:

Businesses are looking to hire

The latest job vacancies rose by 0.8% in the three months to February, to a two-year high of 151,700.

New home sales hit 5 year high

New home sales have risen by 1.1% during February this year (final red column), after gaining 1.8% in January, which is nearly a five-year high.

Top 5 most clicked on stories

• Peter Switzer: Three market killers and my care factor
• Paul Rickard: Small companies set to do better
• Penny Pryor: Shortlisted – Super Stock Selectors
• Charlie Aitken: The dash from cash
• Roger Montgomery: High quality, cheap stocks – ANZ, Ansell

Recent Switzer Super Reports

• Thursday, 2 April, 2015: Bumper Easter Special
• Monday, 30 March, 2015: Super Stock Selectors