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Northern Star Newsletter 7/25/2016


Northern Star Newsletter 7/25/2016

Message from Jon

Are we there yet?

Even though we are still in the first phase of our next bear market, we are also seeing a prolonged and agonizing shift from bullish sentiment to bearish sentiment. This is caused by numerous factors like the Fed holding interest rates artificially low as well as the overwhelming media coverage of the current presidential circus election campaigns.

Our indicators are showing a bullish sentiment currently giving us cause to look for purchases, albeit cautiously. With the magnitude of Brexit's drop in the markets, this seemingly has generated enough of a pressure release to draw in more investors.

This rally could possibly last another few weeks and or months depending upon how much election turbulence gets factored into the market sentiment. We will likely see an increasing amount of noise going into the early fall which undoubtedly raise the difficulty level higher in choosing investments but this is exactly why we use technicals AND fundamentals in our evaluation process.

Jon

S&P 500 Closes at Another New Record

WEEKLY UPDATE - JULY 25, 2016

Stocks ended a fourth straight week of gains, sending the S&P 500 index to another record high.[1] For the week, the S&P 500 gained 0.61%, the Dow grew 0.29%, the NASDAQ added 1.40%, and the MSCI EAFE closed flat.[2]

Second-quarter earnings season is in full swing, and the picture thus far is much like that of the last four quarters: uninspiring performance eked out on very little revenue growth. However, there are some encouraging signs that could presage better performance in the months to come.

As of July 22nd, we have data from 126 S&P 500 companies, accounting for almost one-third of the index's total capitalization. Overall Q2 earnings for these companies are down 1.1% from the second quarter of last year on 2.6% lower revenues. However, over 70% have managed to beat earnings estimates, indicating that managers did a good job of setting the bar low.[3] There are also plenty of revenue surprises from firms that saw more demand than expected.

Though it's disappointing to see another quarter of negative growth, the picture for U.S. firms appears to be improving. Revenue growth is tracking above what we saw from this same group in the first quarter. That's a sign that demand is better than it was earlier this year.

In the week ahead, all eyes will turn to the Federal Reserve's Open Market Committee Meeting to see what guidance the central bank will issue. Though virtually no one on Wall Street expects the Fed to raise interest rates at this meeting, many analysts believe strong domestic data will give the Fed the confidence it needs to raise rates before the end of the year. Traders will be watching closely to see whether the Fed strengthens the language in its statement to prepare markets for a future hike. The week ahead is also a decisive one for earnings, with nearly 1,000 companies reporting, including 189 S&P 500 firms.[4]

ECONOMIC CALENDAR:

Monday: Dallas Fed Manufacturing Survey
Tuesday: S&P Case-Shiller HPI, New Home Sales, Consumer Confidence
Wednesday:Durable Goods Orders, Pending Home Sales Index, EIA Petroleum Status Report, FOMC Meeting Announcement 2:00 PM ET
Thursday:International Trade in Goods, Jobless Claims
Friday:GDP, Employment Cost Index, Chicago PMI, Consumer Sentiment

HEADLINES:

June housing starts rise. Groundbreaking activity on new homes rose 4.8% last month, beating expectations. However, revised May numbers suggest the housing sector isn't picking up speed.[5]

Weekly jobless claims fall to three-month low. The number of Americans filing for new unemployment benefits fell last week to the lowest reading since April, supporting strong labor market trends.[6]

Home resales rise in June. Sales of existing homes surged 1.1% last month to the fastest pace in nine years. Low mortgage rates likely contributed.[7]

Manufacturing activity expands more than expected. A measure of manufacturing sector activity surged to a nine-month high in July, indicating that demand for U.S. factory goods may be rising in the third quarter.[8]

Prevent Tax-Time Surprises With a Summer Adjustment

If you're putting your home on the market, you may be able to avoid paying taxes on some of your capital gains. Here's what IRS regulations say:When filing their taxes, many taxpayers are surprised by unexpectedly large tax bills or refunds. Take the time this summer to adjust your withholdings to bring your estimated taxes in line with what you actually owe.

  • If you show a capital gain on the sale, you may be able to exclude it from your taxes if you have owned and used it as your main home for at least two out of the last five years.
  • If you receive significant income that's not subject to withholding (such as investment or rental income), work with a tax advisor to determine whether you need to make quarterly estimated tax payments.

For more information about adjusting withholdings or other tax issues, consult a tax professional in your area or see IRS Publication 505, "Tax Withholding and Estimated Tax."

Tip courtesy of IRS.gov[10]

Don't Rely on Your Arms for Power

If your shots are falling short, you may be relying too much on your arms and hands to power the club instead of using your whole body. Practice using your body for power with this simple drill:

Set up as usual and address the ball. Try to push the ball into the air without taking a backswing, focusing on driving the ball with your core and body instead of your arms. Practice until you can consistently get some air with the ball and then return to taking normal shots. You should notice an increase in power as you turn your body more fully through the shot.

Tip courtesy of Brady Riggs, PGA | Golf Tips Mag[11]

Tame Your Tummy With Ginger

Many of us suffer from motion sickness or the occasional bout of nausea. Instead of reaching for motion sickness medications, which can cause drowsiness, try ginger. One study found that people who ingested powdered ginger took twice as long to feel ill after being spun in a motorized chair as those who took anti-nausea drugs. When traveling, consider bringing along powdered ginger capsules or crystallized ginger treats. At home, tackle nausea by brewing yourself a cup of fresh ginger tea using grated fresh ginger steeped in boiling water.

Tip courtesy of AARP[12]

Cutting Heating and Cooling Costs

Keeping your house at a livable temperature doesn't have to cost a fortune. Reduce your energy bills and your carbon footprint with these tips:

  • Reduce the amount of energy transfer between interior and exterior by closing your fireplace damper and sealing your ductwork.
  • In the hot months, reduce the amount of baking you do and try to grill outside to avoid heating up your kitchen.
  • Install efficient ceiling fans and open windows on cool nights to keep your house comfortable without turning on the AC.
  • In the colder months, wear sweaters and slippers around the house to remain comfortable at a cooler indoor temperature.

Tip courtesy of RealSimple.com[13]

  1. http://www.cnbc.com/2016/07/22/us-stocks-open-higher-as-investors-wade-through-mixed-earnings.html
  2. http://goo.gl/yVMWfW 
    http://goo.gl/DuhZFZ 
    http://goo.gl/l7NIcm 
    https://www.msci.com/end-of-day-data-search
  3. https://www.zacks.com/commentary/86494/is-the-earnings-picture-improving 
    https://www.zacks.com/commentary/86598/decisive-week-for-the-q2-earnings-season
  4. https://www.zacks.com/commentary/86598/decisive-week-for-the-q2-earnings-season
  5. http://www.foxbusiness.com/markets/2016/07/19/june-housing-starts-rise-4-8.html
  6. http://www.foxbusiness.com/markets/2016/07/21/weekly-jobless-claims-fall-by-1000.html
  7. http://www.foxbusiness.com/markets/2016/07/21/existing-home-sales-rise-1-1-in-june.html
  8. http://www.nasdaq.com/article/us-markit-manufacturing-pmi-hits-9-month-high-in-july-cm653540
  9. http://www.realsimple.com/food-recipes/browse-all-recipes/green-beans-bacon-vinaigrette-00000000044569/
  10. http://www.irs.gov/uac/Review-Your-Taxes-This-Summer-to-Prevent-a-Surprise-Next-Spring
  11. http://www.golftipsmag.com/instruction/full-swing/quick-tips/10-best-swing-tips-ever.html#.U95a3oBdVsI
  12. http://www.aarp.org/health/healthy-living/info-2014/travel-tips.html
  13. http://www.realsimple.com/work-life/money/saving/cut-energy-costs-10000001206325/index.html