Good Morning All,
Just when we thought that a certain species had left Washington and parts of Wall Street, it appears their progeny has surfaced in the form of a nasty 'flu bug. Thusly (sic) we began week eight of the tremendous post disaster upswing, one which many have incidentally dismissed as "just a rally in a bear market". Call it what you will, I have enjoyed this generational opportunity and I hope that at least some of you have participated either through my suggestions or those of your own derivation.
Although I do not pretend to be either a medical doctor or virologist, I can still count and read, leading me to conclude (hopefully I might add) that ten days from now the news networks will be otherwise occupied. As for the market effect of the "swine 'flu", cynic that I am, I believe it has provided yet another trading opportunity. We shall begin the day in a downward path and look towards a Tuesday turnaround as we head toward the government release of the stress tests on May 4. Techs continue to lead the way, look for the S&P 500 to broach 1020 by summer, after a May pullback.
Tuesday, April 28, 2009
Monday, April 20, 2009
April 20th Edition
Good Morning All,
During the heady pre inauguration days, I promised you a broad market rally that would last five to eight weeks and would be led by the technology sector. Well as things turned out, the predicted rally did not immediately make itself present, as the February pullback quickly proved by taking indexes significantly lower. It was only after this fear and loathing of all things investment related returned, that markets prepared themselves for the delayed upswing. On March 9th the fun began and the first week of the move took many by surprise. After four weeks, pundits were reporting that this had been the strongest such move since 1933; and after six weeks, the most powerful since 1938. For all but the "historically challenged" it need not be noted that these past events took place during the "Great Depression".
As we now enter week seven of our suggested time frame, it may be time to review what prompted the move and to question its strength and sustainability. First and foremost we must repeat the oldest of market truisms. "when everyone is bearish it means they have already sold and hold cash, when everyone is bullish, they hold stock and little cash". The former are potential buyers, the latter will one day be sellers. Remember also, that CASH is never a permanent, or even a near permanent position for investment managers.
Secondly, the market was waiting for a resolution to the "bad bank" problem; the government actions for which proved to be the March catalyst. These were the conditions that turned market sentiment and the follow-through of weeks two and three provided the all important momentum change. So what now?
As we begin week seven, the same old worries seem to be resurfacing, even though earnings reports have been less onerous than most thought. If it can be said that the fear of "systemic risk", ie. the bank failures, has been either mitigated or eliminated by time and timely actions on the part of government agencies....then the only thing left to worry about is a recession, and frankly speaking ...recessions do end. Thus today's early decline, or rout if you like, is most probably a serious bout of profit taking after the six week, nearly uninterrupted, runup. It may prove to be more than that but don't look for a retest of the old lows because we have come a long way. A careful view might be to step aside until the smoke clears, a more adventurous one might involve staying around for a blow off rally up to 1020 S&P 500.
Fear not , I will not reprint my stock list today...although you might wish to refer to it.
Commentary:
The recent media attention given to Iran, North Korea, Cuba and Venezuela would be humerous if it were not so serious to the radical right. NONE of these countries pose a threat to the United States. The combined might of China, Japan, Europe, Russia and the United States will oppose any perceived aggression of which the worst of them may dream. President Obama has taken great steps towards unifying this alliance of the powerful; and will be so accredited by history.
The most present danger to America and its President lies not from without.....but from within.
During the heady pre inauguration days, I promised you a broad market rally that would last five to eight weeks and would be led by the technology sector. Well as things turned out, the predicted rally did not immediately make itself present, as the February pullback quickly proved by taking indexes significantly lower. It was only after this fear and loathing of all things investment related returned, that markets prepared themselves for the delayed upswing. On March 9th the fun began and the first week of the move took many by surprise. After four weeks, pundits were reporting that this had been the strongest such move since 1933; and after six weeks, the most powerful since 1938. For all but the "historically challenged" it need not be noted that these past events took place during the "Great Depression".
As we now enter week seven of our suggested time frame, it may be time to review what prompted the move and to question its strength and sustainability. First and foremost we must repeat the oldest of market truisms. "when everyone is bearish it means they have already sold and hold cash, when everyone is bullish, they hold stock and little cash". The former are potential buyers, the latter will one day be sellers. Remember also, that CASH is never a permanent, or even a near permanent position for investment managers.
Secondly, the market was waiting for a resolution to the "bad bank" problem; the government actions for which proved to be the March catalyst. These were the conditions that turned market sentiment and the follow-through of weeks two and three provided the all important momentum change. So what now?
As we begin week seven, the same old worries seem to be resurfacing, even though earnings reports have been less onerous than most thought. If it can be said that the fear of "systemic risk", ie. the bank failures, has been either mitigated or eliminated by time and timely actions on the part of government agencies....then the only thing left to worry about is a recession, and frankly speaking ...recessions do end. Thus today's early decline, or rout if you like, is most probably a serious bout of profit taking after the six week, nearly uninterrupted, runup. It may prove to be more than that but don't look for a retest of the old lows because we have come a long way. A careful view might be to step aside until the smoke clears, a more adventurous one might involve staying around for a blow off rally up to 1020 S&P 500.
Fear not , I will not reprint my stock list today...although you might wish to refer to it.
Commentary:
The recent media attention given to Iran, North Korea, Cuba and Venezuela would be humerous if it were not so serious to the radical right. NONE of these countries pose a threat to the United States. The combined might of China, Japan, Europe, Russia and the United States will oppose any perceived aggression of which the worst of them may dream. President Obama has taken great steps towards unifying this alliance of the powerful; and will be so accredited by history.
The most present danger to America and its President lies not from without.....but from within.
Wednesday, April 1, 2009
April 1st Edition
Good Morning All,
.....and welcome to Financial Fool's Day, you know, the one wherein the G20 leaders all meet to figure out who or what, and is or was, responsible for the mess we are in. Few of these present guys were present at the creation of our collective idiocy but fewer still were alert enough to either speak up or act as the debacle unwound. Either way, it is now up to their collective courage and intellect to solve the current problem and more important still, to put in place, proper and enforceable regulations that will (touch wood or G.W.'s head) prevent a future collapse from occurring....well at least diminish the chances of such.
Although there will be much finger pointing during the days to come, little of this activity will be of consequence; what will be important is the "collective" recognition that there are, and will forever be, people in every generation who believe in the creed so aptly stated in the 1987 movie Wall Street that "greed is good". I use this quote not just because it rings so very well, but also because it wonderfully captures the essence of the much ballyhooed "Reagan Revolution", a time during which the seeds of our crisis were sown. The Reagan legacy was all about smaller government and deregulation....the market place, Republicans believed then and continue to espouse now, is the solution to every problem, as it will level the playing field for all, creating prosperity across the globe. Ah the joys of trickle down economics.. eh !
I continue to abuse myself by spending far too much time watching the ideologues on CNBC, and despite the now famous send up by comedian, cum political commentator Jon Stewart, they remain largely unabashed by such criticism. One of theirs' and Wall Street's most interesting rants seems to surround the concept that Main Street, the Democrats and a number of other newly ordained populists are indulging themselves in a form of class warfare. Wow, what a concept that would be....or come to think of it...isn't that precisely what these guys have been waging against the disappearing middle class, lo these many years.
Markets finally staged my long predicted three week rally and after a Monday pause for recollection, moved up on Tuesday. We may spend a little time in the new trading range but the mid term bias should be upward, despite bad economic news and the coming earnings data. When markets go up in the face of bad news, they are showing a clear sign of seller exhaustion. This may only be a "bear market rally" but as history shows, these events can be both broad ranging and profitable. Intel (under 15) yields 3.8% and has no financial problems while Alcoa at sevenish has many, but trades for nearly nothing at these levels.
There are now web sites that proclaim "let the revolution begin" a sure sign of the times. I will however stick to my more moderate mantra; "let's get on with the renaissance".
.....and welcome to Financial Fool's Day, you know, the one wherein the G20 leaders all meet to figure out who or what, and is or was, responsible for the mess we are in. Few of these present guys were present at the creation of our collective idiocy but fewer still were alert enough to either speak up or act as the debacle unwound. Either way, it is now up to their collective courage and intellect to solve the current problem and more important still, to put in place, proper and enforceable regulations that will (touch wood or G.W.'s head) prevent a future collapse from occurring....well at least diminish the chances of such.
Although there will be much finger pointing during the days to come, little of this activity will be of consequence; what will be important is the "collective" recognition that there are, and will forever be, people in every generation who believe in the creed so aptly stated in the 1987 movie Wall Street that "greed is good". I use this quote not just because it rings so very well, but also because it wonderfully captures the essence of the much ballyhooed "Reagan Revolution", a time during which the seeds of our crisis were sown. The Reagan legacy was all about smaller government and deregulation....the market place, Republicans believed then and continue to espouse now, is the solution to every problem, as it will level the playing field for all, creating prosperity across the globe. Ah the joys of trickle down economics.. eh !
I continue to abuse myself by spending far too much time watching the ideologues on CNBC, and despite the now famous send up by comedian, cum political commentator Jon Stewart, they remain largely unabashed by such criticism. One of theirs' and Wall Street's most interesting rants seems to surround the concept that Main Street, the Democrats and a number of other newly ordained populists are indulging themselves in a form of class warfare. Wow, what a concept that would be....or come to think of it...isn't that precisely what these guys have been waging against the disappearing middle class, lo these many years.
Markets finally staged my long predicted three week rally and after a Monday pause for recollection, moved up on Tuesday. We may spend a little time in the new trading range but the mid term bias should be upward, despite bad economic news and the coming earnings data. When markets go up in the face of bad news, they are showing a clear sign of seller exhaustion. This may only be a "bear market rally" but as history shows, these events can be both broad ranging and profitable. Intel (under 15) yields 3.8% and has no financial problems while Alcoa at sevenish has many, but trades for nearly nothing at these levels.
There are now web sites that proclaim "let the revolution begin" a sure sign of the times. I will however stick to my more moderate mantra; "let's get on with the renaissance".
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