Welcome to the second week of the U.S. government shutdown. While most civilian Department of Defense employees have been sent back to work, the infighting in Washington continues to disrupt the federal government’s operations. While the uncertainty is weighing on investor sentiment and causing day-to-day fluctuations, the S&P 500 is flat over the past week.
Just today, the major indices cut their opening losses in half this afternoon as rumors of a potential debt ceiling agreement emerged. I can’t speak for the exact rumors just yet, but it will be interesting to see if the government really runs out of money in mid-October. As for me, I share the opinion of Moody’s Analytics’ CEO Raymond McDaniel, who proclaimed yesterday that a U.S. government default is “extremely unlikely.”
Treasury Secretary Lew said that a failure of the U.S. to pay its obligations if the debt limit is not raised “would be unprecedented and has the potential to be catastrophic.” That being said, he has introduced extraordinary accounting measures to help ensure that the government has something in its coffers come October 17. And leaders of Congress on both sides have said and even introduced bills to insure that the U.S. will not default on its obligations. House Speaker John Boehner on Thursday said that he is flexible about working with Democrats to increase in the debt limit. Meanwhile, President Obama has all but promised at least a short-term increase in the federal borrowing cap.
So the threat of a default remains extremely unlikely. Even so, we’ll probably continue to see some day-to-day choppiness if these distractions continue. The best thing you can do to protect your portfolio from market jitters is by sticking with the fundamentally strongest stocks. To get you started, I’ve pulled together a list of 51 big blue chips that were upgraded or downgraded in my Portfolio Grader stock screening tool over the weekend. Take a moment to review the list and see if any of your current positions are on the move.
Upgrades
Last Week’s Holds, Now Buys
| Symbol | Company Name | Quantitative Grade | Fundamental Grade |
| GIB | CGI Group Inc. | B | B |
| LVS | Las Vegas Sands Corp. | B | B |
| MSI | Motorola Solutions, Inc. | B | B |
| NTAP | NetApp, Inc. | B | B |
| SNDK | SanDisk Corporation | C | A |
| STJ | St. Jude Medical, Inc. | B | C |
| STX | Seagate Technology PLC | B | C |
| TSU | TIM Participacoes S.A. | B | C |
| WYNN | Wynn Resorts, Limited | B | C |
| YNDX | Yandex NV | C | B |
Last Week’s Sells, Now Holds
| Symbol | Company Name | Quantitative Grade | Fundamental Grade |
| BAM | Brookfield Asset Management Inc. | D | C |
| CEO | CNOOC | D | B |
| CHU | China Unicom (Hong Kong) | D | B |
| CXO | Concho Resources Inc. | C | D |
| INFY | Infosys | D | B |
| SAN | Banco Santander S.A. | C | C |
| TKC | Turkcell Iletisim Hizmetleri A.S. | D | C |
| VLO | Valero Energy Corporation | C | C |
| WFT | Weatherford International Ltd. | C | C |
Downgrades
Last Week’s Buys, Now Holds
| Symbol | Company Name | Quantitative Grade | Fundamental Grade |
| ACE | ACE Limited | C | B |
| BLK | BlackRock, Inc. | C | B |
| BMO | Bank of Montreal | C | B |
| CCE | Coca-Cola Enterprises, Inc. | C | C |
| CLX | The Clorox Company | C | C |
| CS | Credit Suisse Group AG | C | B |
| DISCA | Discovery Communications, Inc. | C | C |
| EMR | Emerson Electric Co. | B | C |
| FDX | FedEx Corporation | C | C |
| GM | General Motors Company | C | C |
| GS | The Goldman Sachs Group, Inc. | C | B |
| HIG | The Hartford Financial Services Group, Inc. | B | C |
| MFC | Manulife Financial Corporation | B | D |
| MTB | M&T Bank Corporation | C | B |
| PCAR | PACCAR Inc | C | C |
| UPS | United Parcel Service, Inc. | B | C |
Last Week’s Holds, Now Sells
| Symbol | Company Name | Quantitative Grade | Fundamental Grade |
| BAX | Baxter International Inc. | D | C |
| BF.A | Brown-Forman Corporation | D | C |
| CCI | Crown Castle International Corp. | D | C |
| CL | Colgate-Palmolive Company | D | C |
| COV | Covidien Plc | D | C |
| CX | Cemex SAB de CV | D | D |
| DTE | DTE Energy Company | D | C |
| EPD | Enterprise Products Partners L.P. | D | C |
| FRX | Forest Laboratories, Inc. | D | C |
| HBC | HSBC Holdings plc | D | C |
| HCN | Health Care REIT, Inc. | D | C |
| MRK | Merck & Co., Inc. | D | C |
| NU | Northeast Utilitites | D | B |
| SNN | Smith & Nephew plc | D | C |
| SNY | Sanofi | D | D |
| TD | The Toronto-Dominion Bank | D | C |
Sincerely,
Louis Navellier