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June 10, 2011, 12:01 a.m. EDT
By Jonathan Burton, MarketWatch
SAN FRANCISCO (MarketWatch) "” U.S. stocks notched their first win so far in June on Thursday after six straight losing sessions, but week-to-week market gyrations don't much faze Laszlo Birinyi.
Call Birinyi a long-term oriented trader "” and a longstanding player on Wall Street, who has experienced all kinds of markets over a 35-year career.
"We're not going to get terribly concerned about the day-to-day squiggles," said Birinyi, president of Birinyi Associates, Inc., a Westport, Conn.-based investment management and research firm.
Birinyi has bigger things on his mind "” like his call for the Standard & Poor's 500-stock index /quotes/zigman/3870025 SPX -1.01% to approach 2100 over the next several years. That would put the U.S. market benchmark more than 60% above its close on Thursday.
"One thing that has kept us in this market is that the bearish argument has not been based on solid foundations," Birinyi said. "When you have a market that begins like this market did, doubling in the first two years, those are not the kind of markets which are of limited duration and limited price."
Accordingly, Birinyi's tactical moves "” in part based on a stock's 50-day moving average versus the market "” call for lightening up on stocks and sectors that have come too far, too fast, and buying issues he believes will see strong interest from both traders and longer-term investors.
In this way, Birinyi follows the money, riding the momentum "” a market wind "” that carries both share values and investor portfolios higher:
Consumer staples are classic defensive holdings that thrive when market conditions are poor, but Birinyi isn't a bull in this shop.
"We're trying to minimize our risk and recognize what the market has done," he said. "The market is telling us that a lot of people have bought the [consumer staples] story."
For example, Consumer Staples Select Sector SPDR /quotes/zigman/246134/quotes/nls/xlp XLP -0.79% , an exchange-traded fund of consumer-staples stocks, is up 7% so far this year, about four percentage points better than the S&P 500
Birinyi pointed to Costco Wholesale Corp. /quotes/zigman/67728/quotes/nls/cost COST -0.61% as an example of a stock with a strong recent return that is "somewhat ahead of the game." Costco shares are up 10% so far this year, almost seven percentage points ahead of the S&P 500.
Here's what Birinyi likes about energy stocks: the lack of consensus about the price of oil, while earnings for companies in the sector continue to be strong.
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