Pullback

9am EST We are still getting mixed numbers from the economy as expected. We got a mixed batch of retail sales numbers this morning. We got employment numbers that showed us a firming labor market. While none of these scream that the economy is appreciably better, it is a little fundamentally supportive for stocks.

The economy has to get better for the market to continue higher. While there is a supply/demand imbalance for money managers, a strengthening economy ultimately has to come with it. If money managers just jump in and buy at every opportunity, we will accidentally end up with stocks that sport huge P/E ratios and growth hindered by the anemic economy. That would be a recipe for ultimate disaster in the market. The best scenario is one where the market trades in a range while the economy catches up fundamentally.

As a trade today, I am looking at none other than World Wrestling Entertainment (WWE). It hit a high of $12.99 on April 3rd and strongly pulled back to the 50 day moving average. After 2 months of consolidation, the stock traded above the previous high of $12.99 to close at $13.07. This stock should be used as a longer term trade and purchased in stages. The stochastics are in the overbought range and the stock goes ex-dividend in 2 weeks. There are a couple factors that may hold the stock back in the short term. It is a buy for me because of the recent strength and the factors that support the stock long term. One other positive factor for this trade is that you receive a very nice dividend while the stock consolidates. Until next time, stay low risk..