Market Thoughts 12.03.09
Investors have been surprised by the market's strength this year. I should probably say that it is traders who have been surprised because it seems as if there are no investors left anymore! Investors were particularly surprised how stocks shook off the Dubai debt crisis and probably did not expect Monday's rally. We chronicled our opinion that this was more a "Sell The News" reaction here: http://lumencapital.blogspot.com/2009/11/tsionna-113009.html
On Monday stocks were strong with broad-based gains in many sectors. Stocks staged a carry over day yesterday, consolidating the previous move. Speculation seemes to have come back as Nasdaq volume picked up. Gold in particular was strong as were certain sectors like agriculture and technology. Certain indices are near their highs for the year. Seasonal patterns particularly regarding the Dow Jones Industrial Average (discussed yesterday) would suggest that stocks could move higher between now and year's end. Money flows are positive as well.
Under the surface though there are a few things we should watch. Several of our money flow indicators are trekking to overbought status. Certain sectors have been underperforming, in particular banks and financials seem to be unable to gain any traction among investors. Recent market breadth has also been quite narrow although this has improved this week. Small-cap stocks have also not participated much in recent weeks and while some market indices such as the S&P are near their highs, they have repeatedly bumped up against major resistance levels and dropped back.
Investors have not been fond of these markets since mid-summer. As one market pundit put it "the attitude of many investors is stocks are acting well & I'll stick with them, but I don't trust them very much and I'll be quick to sell at the first sign of trouble." 1. We've noted before that part of what has caused the market to rise this year has been investors taking the Armageddon scenario off the table. That has likely been what's brought us to the point where we trade today. However many investors have a hard time justifying the market's trading patterns with the bleakness of the economy. This skepticism may become more established next year but for now it will likely take a backseat to end of the year patterns and Wall Street's desire to get paid for a good year.
*Long ETFs related to the NASDAQ, Energy, the Dow Jones Industrial Average and the I Shares Russell 2000 in client accounts. Long ETFS related to Energy, banks and financials, gold & the S&P 500 in client and personal accounts.
1. Doubt If You Must, But Respect the Action. James DePorre, RealMoney.com http://www.thestreet.com/b/rmoney/revsharkblog/10636546.html
On Monday stocks were strong with broad-based gains in many sectors. Stocks staged a carry over day yesterday, consolidating the previous move. Speculation seemes to have come back as Nasdaq volume picked up. Gold in particular was strong as were certain sectors like agriculture and technology. Certain indices are near their highs for the year. Seasonal patterns particularly regarding the Dow Jones Industrial Average (discussed yesterday) would suggest that stocks could move higher between now and year's end. Money flows are positive as well.
Under the surface though there are a few things we should watch. Several of our money flow indicators are trekking to overbought status. Certain sectors have been underperforming, in particular banks and financials seem to be unable to gain any traction among investors. Recent market breadth has also been quite narrow although this has improved this week. Small-cap stocks have also not participated much in recent weeks and while some market indices such as the S&P are near their highs, they have repeatedly bumped up against major resistance levels and dropped back.
Investors have not been fond of these markets since mid-summer. As one market pundit put it "the attitude of many investors is stocks are acting well & I'll stick with them, but I don't trust them very much and I'll be quick to sell at the first sign of trouble." 1. We've noted before that part of what has caused the market to rise this year has been investors taking the Armageddon scenario off the table. That has likely been what's brought us to the point where we trade today. However many investors have a hard time justifying the market's trading patterns with the bleakness of the economy. This skepticism may become more established next year but for now it will likely take a backseat to end of the year patterns and Wall Street's desire to get paid for a good year.
*Long ETFs related to the NASDAQ, Energy, the Dow Jones Industrial Average and the I Shares Russell 2000 in client accounts. Long ETFS related to Energy, banks and financials, gold & the S&P 500 in client and personal accounts.
1. Doubt If You Must, But Respect the Action. James DePorre, RealMoney.com http://www.thestreet.com/b/rmoney/revsharkblog/10636546.html
posted by CR English at 7:13 AM
<< Home