Worth On Markets.
Last Friday on CNBC's "Fast Money" and Monday in his weekly commentary, Oppenheimer & Co analyst Carter Worth put forward evidence of market change.1 If it's not a change in market trend we are witnessing then at least a change in the market's rate of assent.
Some key take-aways:
*Gaps in indices tend to get filled. There have been 5 major gaps in the S&P 500 since the March bottom and we have currently filled two of these.
*The rate of ascent of the Mar-Oct. advance has been abating for several weeks....The rate of the ascent has been declining.
* Thinks S&P could trade down to the 970 level which is near it's 150 day moving average and would fill a third gap. {My note: From last nights close that would imply about a further 7% decline in the index and would leave us with a about a 12% decline from the mid-October highs near 1,100.}
*Market is struggling now at a down trendline in effect since the all time highs in October of 2007.
*Thinks the proper template for next year is a market that could absorb these gains and churn about similar to what the market did in 2004. For the record I think that template is also a possible likelihood but sometime next year. However I also think we could possibly have at least 4-6 decent months early next year before that template becomes more apparent. We've already said in prior posts that we think its possible that the S&P could see 1200 to 1300 next year if the economy proves to be on the mend. In 2004 markets didn't really top out until March of that year and then had a pretty good rally into year end.
*Trading action in individual stocks is much worse of late than trading action in the overall market. That's because a handful of very large-cap defensive names are resisting market weakness and their relative importance in the major averages is masking what has been a very bad two week period for stocks.
I've always respected Carter Worth's work. By the way I also think Oppenheimer as a firm is one place that still tries to do the right thing for their clients. (Disclosure: I have a Brother-in-Law that works there and is an expert on municipal bonds and I sometimes buy bonds from him for client accounts.) If I was to ever look to go back and work for a brokerage firm I would definitely consider talking to them.
*Long ETFs related to the S&P 500 in certain client accounts.
1. "Money In Motion, C. B. Worth, November, 2 2009, Oppenheimer & Co.
Some key take-aways:
*Gaps in indices tend to get filled. There have been 5 major gaps in the S&P 500 since the March bottom and we have currently filled two of these.
*The rate of ascent of the Mar-Oct. advance has been abating for several weeks....The rate of the ascent has been declining.
* Thinks S&P could trade down to the 970 level which is near it's 150 day moving average and would fill a third gap. {My note: From last nights close that would imply about a further 7% decline in the index and would leave us with a about a 12% decline from the mid-October highs near 1,100.}
*Market is struggling now at a down trendline in effect since the all time highs in October of 2007.
*Thinks the proper template for next year is a market that could absorb these gains and churn about similar to what the market did in 2004. For the record I think that template is also a possible likelihood but sometime next year. However I also think we could possibly have at least 4-6 decent months early next year before that template becomes more apparent. We've already said in prior posts that we think its possible that the S&P could see 1200 to 1300 next year if the economy proves to be on the mend. In 2004 markets didn't really top out until March of that year and then had a pretty good rally into year end.
*Trading action in individual stocks is much worse of late than trading action in the overall market. That's because a handful of very large-cap defensive names are resisting market weakness and their relative importance in the major averages is masking what has been a very bad two week period for stocks.
I've always respected Carter Worth's work. By the way I also think Oppenheimer as a firm is one place that still tries to do the right thing for their clients. (Disclosure: I have a Brother-in-Law that works there and is an expert on municipal bonds and I sometimes buy bonds from him for client accounts.) If I was to ever look to go back and work for a brokerage firm I would definitely consider talking to them.
*Long ETFs related to the S&P 500 in certain client accounts.
1. "Money In Motion, C. B. Worth, November, 2 2009, Oppenheimer & Co.
posted by CR English at 7:50 AM
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