In This Edition...

• Universal Delivery Touches Base 
• Market Still in a Holding Pattern (& trapped between oil and the dollar) 
• Consumer Confidence Hints at a Long-Term Buy 

Universal Delivery Touches Base

After a relatively long hiatus in terms of news, Universal Delivery Solutions Group (UDSG.PK) came out with something interesting - even if a little broad - today. The full press release appears at the bottom of this report. A synopsis and our thoughts, however, are in order first. 

Basically, the company is acknowledging the overall market's struggle has also affected their stock's price. CEO Adam Coblin correctly added, though, the equity market's challenges haven't changed a thing for UDS Group's business operation. 

Coblin mentioned they're trying to find a balance between financing their growth while still working to sustain the relative value of the company's shares ... an activity many companies are likely undertaking right now. 

The news release also reprised Universal Delivery Solution's efforts to move to a bulletin board listing. We hadn't heard anything on this front for several weeks, though that's not entirely unexpected ... the paperwork and red tape makes the process fairly time consuming. We're still looking for a bulletin board listing in the foreseeable future. 

Overall the press release didn't really say a lot. From our point of view, the real message is that they sent one at all. We'll use that as a sign the company isn't oblivious to what's going on outside in the real world.
 

Still In A Holding Pattern

It was less than a week ago we took a really good look at the love triangle between crude oil, the U.S. dollar, and the Russell 2000 index. Not a lot has changed since then (though it's only been three days). Nevertheless, we want to provide an update since these factors will ultimately guide our actions. 

Crude oil hasn't exactly moved higher, yet the support near the $110 level has held up pretty decisively. 

The U.S. Dollar Index hasn't moved any higher either. For a brief moment on Tuesday we saw the index reach a new multi week high of 77.62, but it faded pretty quickly. Now we're back down under the recent ceiling. 

As for stocks, we were concentrating on the Russell 2000 Small Cap index. It appeared to have peaked at 764 on the same day oil hit lows of $110 ... and on the same day the U.S. Dollar Index hit a peak. Though the stock market has basically behaved as we expected, neither crude nor the dollar really have. 

So, we're still essentially where we were a few days ago, which is mostly on the bearish side of the fence. That's still only a short term call though. 

Should crude oil slide under $110, or if the U.S. Dollar Index breaks past its recent ceiling, then we'll rethink our stance.
 

Time To Shop For Long-term Holdings

We've spent so much time lately focusing on the short term market and the battle between crude oil and the U.S. dollar, we haven't had much of a chance to look at the bigger picture. Today we're going to make up for lost time by revisiting one of our key long term market indicators ... consumer confidence.

For those who were reading the newsletter about a year ago, you'll know our stance on opinion data - when the crowd turns into an angry mob, that's the point in time we've observed it's best to bet against them.

Case in point - the Conference Board's Consumer Confidence figure. When the bottom drops out of consumer confidence, it's usually at a long term bottom for the stock market.

March of 2003 is a great example. Consumer confidence sank to 61.4 ... the lowest reading in more than a decade at the time. You may recall March of 2003 also happened to be the point when the bear market officially ended and the bull market officially began. Of course nobody really knew that until several months later. However, a willingness to get in during what appeared to be a terrible time to get in actually paid big dividends.

If it were just one instance, we wouldn't think much of it. However, time and time again we've seen the average man or woman turn highly optimistic about the economy at about the same time they should be taking profits on stocks. And, the average consumer seems to be most worried when they should be pouring money back into the stock market.

The nearby chart compares the S&P 500 to the consumer confidence figure over the last 30 years (sorry for the small size - click here for the bigger chart). Sharp bottoms in confidence are marked with blue arrows on both charts. Likewise, tops or peaks in consumer confidence are marked with red arrows on both charts. 

Bear in mind that the peaks in confidence are a little tougher to pinpoint then the bottoms .,.. they aren't quite as pointy. To help make good use of the data, we've actually highlighted the points in time when consumer confidence started to sink, since confidence readings can stay at high levels for a relatively long period of time. 

The reason we bring up today stems from yesterday's update from the Conference Board. The August reading of 56.9 is the second increase in a row. With a reading of 51.0 from June, we may have already made that sharp bottom in confidence that tends to coincide with a market bottom.

This doesn't change one thing about our short term outlook ... we're still looking for a little more downside over the next several days. The Consumer Confidence number is a long-term tool, and not to be used for surgical trading. We think this chart indicates stocks are apt to move considerably higher over the next several months. 

The Universal Delivery Solutions Group news release is below.
 

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Pacific Shores Investments, LLC has been paid a fee of $50,000 cash and 1.5 million shares of newly issued restricted stock by Universal Delivery Group, Inc. for coverage of the Company. Additionally, the Managing Member of Pacific Shores Investments, LLC has purchased 730,000 shares of Universal Delivery Group, Inc. in the open market with an average cost basis of $.044 cents per share. Additionally, Pacific Shores Investments, LLC has also purchased 1,000,000 free trading shares in a private transaction from a third party at an average cost of $.051 cents per share and 2,000,000 shares of newly issued restricted stock at $.03 cents per share in a private placement transaction. 

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