BloggingStocks

Stocks at Two-Year High: What Lies Ahead?

Douglas McIntyre — Mon, 13 Dec 2010 10:00:00 EST

The S&P 500 is now at a two-year high, closing last week at 1,240.40. The index last hit that level in September 2008.

Some analysts believe that the market trades ahead of what it sees in the economy six months out. If that's true, Wall Street expects improved employment, a moderately rising GDP, and early signs of a real estate recovery.

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The Dow Rises, Falls, and Sometimes Meanders for a Long Time

Joseph Lazzaro — Wed, 02 Jun 2010 17:30:00 EST

Filed under: Indices, DJIA

There are bull markets and bear markets, and while each often display a pattern that matches historical precedents, there are those 'irregular periods' that break the mold. Moreover, investors need to remain cognizant of that fact that an irregular period can be long. Very long.

For example, consider the period beginning in the mid-1960s. The Dow crossed the 1,000 mark for the first time in January 1966. President Lyndon B. Johnson (D-Texas) was in the White House then, and he was in the process of escalating the war in Vietnam. Inflation rose, due to ramping defense and social spending. The Dow soon dropped below 1,000.

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Guru Strategy: Don't Rush into Junk Stocks

Nikhil Hutheesing — Tue, 27 Apr 2010 09:30:00 EST

Filed under: Newsletters, AFLAC Inc (AFL), CVS Corp (CVS), Oracle Corp (ORCL), Bargain Stocks, Stock Picks

At the beginning of a bull market, it's often the most speculative stocks that perform the best. As the market has rebounded over the past year, the Dow Jones Industrial Average ($INDU) is up about 40% while the S&P SmallCap 600 Index is up about 58%. And that is exactly why Richard Moroney, editor of Dow Theory Forecasts, is now sounding warning bells.

"The risk trade has defied conventional wisdom by continuing this year, tempting some investors to throw out their playbook and join the rush into high risk stocks," says Moroney.

Moroney warns that investors chasing after risky companies will now be paying a premium for low quality merchandise. Instead, he suggests that investors pursue attractively valued stocks with good fundamentals.

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Guru Strategy: Don't Rush into Junk Stocks originally appeared on BloggingStocks on Tue, 27 Apr 2010 09:30:00 EST. Please see our terms for use of feeds.

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Investors Beware -- The Stock Market Is About to Hit a Wall

Louis Navellier — Thu, 08 Apr 2010 11:30:00 EST

Filed under: Earnings Reports, FedEx Corp (FDX), Economic Data, Rite Aid Corp (RAD)

Last Friday, we learned the economy added 123,000 jobs, the most in three years. Investors everywhere are now waiting for the Dow to cross the 11,000 mark and hoping that the 6% added to the major indexes in March will happen once again in April as we enter earnings season.

Personally, I don't think Dow 11,000 really means anything. But I'll admit I'm pretty fired up about the upcoming first-quarter earnings season. Since the first quarter of 2009 was arguably the worst part of the recession, favorable year-over-year comparisons will lead to blowout results for most companies. In fact, I expect the S&P 500's operating earnings to be up almost 70% during the first quarter on average. With numbers like that, it's easy to imagine the market will post significant gains.

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Reuters poll: Recession to last one or more years

Connie Madon — Mon, 27 Apr 2009 18:10:00 EST

Filed under: Forecasts, Money and Finance Today, Recession, Financial Crisis

The great debate: Have we reached bottom in the financial crisis, or is there more to come? It's a multi-million dollar question.

Reuters conducted a poll on April 21-27 to get feedback form analysts across Europe and the US. The sobering conclusion was that the recession could last a year or two more. Most said that the worst is yet to come. Their findings stated: "Financial and macroeconomic stability are still some way off and we don't yet have the foundation for a solid recovery."

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Jobless rate highest since ... right before the greatest bull run in history

Zac Bissonnette — Sun, 08 Mar 2009 14:10:00 EST

Filed under: Employees, Economic Data, DJIA

The headlines are terrifying. The jobless rate is the highest it's been since 1983 -- 8.1% -- and it could get worse.

"We'll be at 10% unemployment by year end," Joseph LaVorgna, chief U.S. economist at Deutsche Bank, told the Wall Street Journal (subscription required). "What's going to stop it?"

The gloom and doom crew has been winning the day lately, but here's the question: What does it all mean for stocks?

Go back to 1983 for the answer -- four years after BusinessWeek had declared the permanent death of equities. That year marked essentially the beginning of the greatest bull run in history. From 1982 through 1999, the Dow Jones Industrial Average soared from 800 to over 11,000.

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Jobless rate highest since ... right before the greatest bull run in history originally appeared on BloggingStocks on Sun, 08 Mar 2009 14:10:00 EST. Please see our terms for use of feeds.

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Dow 8,000 stops by to visit again; what's the next level to watch out for?

Joseph Lazzaro — Wed, 21 Jan 2009 10:30:00 EST

Filed under: Forecasts, Indices, Technical Analysis, DJIA

Once again, the Dow has registered a lame, listless rally and then moved back below 8,000.

For those investors who may not follow indices closely, the 8,000 level has psychological but not technical support. The latter measures such things as the number of investors who are buying / selling, whether investors are committing new money to the market etc.

Right now a battle is taking place between bulls and bears at the institutional investor level: the bears argue the worst economic news stemming from the financial crisis is yet to come; the bulls say that the worst news is behind us, and that government stimulus, fiscal and monetary, will both stabilize the financial system and get the U.S. economy moving again.

The Dow Tuesday closed below 8,000 at 7,949. If the bears can keep the Dow below 8,000, then push it through 7,800, then 7,600, it will not be a pleasant time for investors.

Some institutions may continue to hand-sit until mid-February, preferring to await the Obama Administration's announcement of the exact size of the fiscal stimulus package, now believed to be approaching $725-850 billion.

Continue reading Dow 8,000 stops by to visit again; what's the next level to watch out for?

Dow 8,000 stops by to visit again; what's the next level to watch out for? originally appeared on BloggingStocks on Wed, 21 Jan 2009 10:30:00 EST. Please see our terms for use of feeds.

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Aren't stocks cheap now? Yes, but...

Joseph Lazzaro — Thu, 13 Nov 2008 13:46:00 EST

Filed under: Press Releases, Indices, DJIA

One hears the mantra almost daily, often from friends and relatives:

Aren't stocks cheap? Look at those low P/Es! GE is at $15 a share, Intel below $14, Du Pont at about $27. My goodness, the Dow is down to 8,200. Isn't now a good time to buy stocks?

It is, if you believe the Dow is forming a bottom and/or that the worst of the financial crisis is behind us, and the U.S. economy is set to recover.

However, the alternate viewpoint argues that the Dow has not bottomed, could very well fall another 1,000 points, with panic selling (known as 'capitulation' in Wall Street circles) taking the Dow to levels well below that, at least for a short period of time, possibly longer.

Hence, purchasing shares for the first time now (or adding to existing positions) given the latter scenario would create an immediate 10% loss, or possibly more.

Monitor corporate earnings and job growth

What's a better tack to take concerning when to buy more shares? Monitor U.S. corporate earnings and job growth.

Continue reading Aren't stocks cheap now? Yes, but...

Aren't stocks cheap now? Yes, but... originally appeared on BloggingStocks on Thu, 13 Nov 2008 13:46:00 EST. Please see our terms for use of feeds.

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Is now a good time to sell 20% of your stock portfolio?

Joseph Lazzaro — Mon, 10 Nov 2008 10:40:00 EST

Filed under: Forecasts, Indices, Technical Analysis, DJIA, Recession, Financial Crisis

Talk to the stock market's bulls and they argue the Dow is forming a bottom at / near 8,000.

Talk to the bears and they say you're dreaming, if you think the Dow has bottomed at 8,000.

What's the typical investor to do?

Let's do a condensed, cross-methodology analysis to see if we can arrive at an informed investment decision / conclusion.

Technical Indicators: Bearish.
Fundamental Indicators: Bearish.
Monetary Policy: Officials are doing everything they can to stimulate growth. Bullish.
Fiscal Policy: More fiscal stimulus should be on the way, in both the U.S. and aboard. Bullish.

Credit Markets: Recovering, but still strained, with still too much interbank distrust / fear. Bearish.

Geopolitical Risk: On average, it's about the same as it has been during the past 3-5 years. Neutral.

Conclusion: The view from here argues that the outlook for U.S. stocks / stock market is bearish at least for the next six months, and most likely for much of 2009. Further, if Dow 8,000 doesn't hold, the market could fall much more, particularly after 2009 earnings estimates are revised downward, as they are expected to be.

Continue reading Is now a good time to sell 20% of your stock portfolio?

Is now a good time to sell 20% of your stock portfolio? originally appeared on BloggingStocks on Mon, 10 Nov 2008 10:40:00 EST. Please see our terms for use of feeds.

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What if the Dow didn't fall, but also didn't rise, for 10 years?

Joseph Lazzaro — Tue, 28 Oct 2008 17:46:00 EST

Filed under: Indices, S and P 500, DJIA, Recession

Investors have become accustomed to bull markets -- long periods of stock price appreciation, i.e. a rising stock market. That's been the norm since the start of publicly-traded stocks in the United States, and certainly a feature of markets in the post-1980 period.

Provided that the U.S. economy is growing in a sustainable way and increasing its productive capacity, bear markets have been the exception, the momentary pull-back, when one takes a long view of the investment horizon.

The current bear market can be seen in that light, again, provided the nation's economy is on a sustainable growth track with an increasing productive capacity.

Still, the key in the above has been the U.S. economy (obviously). Absent a healthy economy, different Dow case studies pop up.

For example, what if the Dow didn't fall -- and didn't rise -- for seven years? In other words, a sideways Dow where no progress is made? It seems like a remote possibility, but that's exactly what occurred from early 1966, when the Dow fell below 1,000, until late 1972, when the Dow reclaimed the psychologically-significant 1,000 level.

Continue reading What if the Dow didn't fall, but also didn't rise, for 10 years?

What if the Dow didn't fall, but also didn't rise, for 10 years? originally appeared on BloggingStocks on Tue, 28 Oct 2008 17:46:00 EST. Please see our terms for use of feeds.

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Is it a rejuvenated Dow or 'dead cat bounce' Dow?

Joseph Lazzaro — Fri, 29 Aug 2008 13:03:00 EST

Filed under: Indices, Technical Analysis, DJIA

Oil declines by $30 from record highs. Other commodity prices moderate. The dollar rallies. The nation records better-than-expected GDP growth in Q2.

All are positive data points that suggest that the U.S. economy, while it's certainly not in the midst of robust growth, has not run totally into a ditch, either.

What do the latest economic data points mean for the Dow Jones Industrial Average, and U.S. stocks, in general, for the next six to nine months? Here's the bullish and bearish cases:

Bullish case: Technical analysts would cite the Dow's close above the 50-day moving average for three consecutive days, the fact that the Dow held support at the 11,000 level, and a series of higher closing highs and higher closing lows in the past two months.

Further, technical analysts would also cite the fact that the Dow has completed the volume-light June-July-August summer season (typically bearish for stocks) during a period of anemic growth (if the U.S. economy isn't already in a recession), without plunging to nerve-wracking lows. True, the Dow fell from about 12,400 in June to 11,000 in July, but technicians would cite the aforementioned positive technicals as an argument that a bottom is in place.

Bearish case: Technical analysts would cite the fact that the Dow, although above the 50-day moving average, nevertheless remains below the 200-day moving average -- the toughest moving average line to break in trading. Also, market 'up days' have lacked sustained buying strength as measured by the MACD Histogram.

Further, and equally important, Dow bears would say that although the Dow has risen from its 11,000 low, the roughly 600-point increase is still well within the range of a correction -- or in this case short-covering -- in a long-term bearish trend. In other words, the Dow's recent rise could be Pyrrhic or false -- a classic example of a 'dead cat bounce.'

Market Analysis: With all due respect to technical analysts and their indicators, the view here argues that investors/ traders should take their cue from the U.S. economy's fundamentals: specifically, corporate profits and job growth. Absent substantial, sustained gains in each, any Dow rally is viewed with skepticism.

**

What's your view of the Dow? Is this stock market rally real? Or is it temporary? Let us know what you think.

Is it a rejuvenated Dow or 'dead cat bounce' Dow? originally appeared on BloggingStocks on Fri, 29 Aug 2008 13:03:00 EST. Please see our terms for use of feeds.

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Falling knife or opportunity? You make the call.

Zack Miller — Tue, 18 Mar 2008 09:12:00 EST

Filed under: Major Movement, International Markets, Forecasts, S and P 500, DJIA, Recession, NASDAQ

We've been on the phone a lot with investors over the past few weeks. I don't know about you but from where we sit, there is a lot of fear in the market. Investors are worried: worried about what's going to be, how low the markets can go, how the dollar will continue to drop, inflation, etc. There's what to worry about.

But, there is a counter-Chicken Little story setting up behind the backdrop of fear. Bloomberg has an interesting piece out this morning entitled "Buy Signals Abound in U.S. Stocks Shadowed by 1970s". Bloomberg reporters draw comparisons with the almost 20% drop in the S&P 500 (Amex: SPY) we've seen since the October highs.

So, are things any different this time?

Well, for one, Bloomberg claims companies in the S&P 500 are trading at their cheapest levels in more than 18 years to forecasted profits. That means investors believe that forecasted profits are going to fall way short of projections. If the world doesn't come to an end, Bloomberg thinks there may be an opportunity here.

Secondly, valuations versus 10 year Treasuries are also lowest in at least two decades.

Investors don't want to hold stocks. I can't blame them. Anyone who's been trying to pick up some value has probably seen their trades go against them.

Continue reading Falling knife or opportunity? You make the call.

Falling knife or opportunity? You make the call. originally appeared on BloggingStocks on Tue, 18 Mar 2008 09:12:00 EST. Please see our terms for use of feeds.

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Is the bull market over?

Kevin Kersten — Wed, 05 Mar 2008 11:00:00 EST

Filed under: Magazines, Market Matters, Recession

I ran into an interesting article in Fortune titled "Don't expect another bull market: Stock returns may never be the same -- at least for this generation of investors." The article made a bold prediction:

Barring a miracle -- or the creation of a New Math of the market variety -- there's no way we'll ever see a bull market along the lines of what so many of us grew up with.

This is very interesting from a sentiment viewpoint. A few years ago, at the height of the dot com boom, some claimed that we were creating a new economy in which the stock market could not go down. Then it crashed.

I say, don't buy into these extremes. In the long run, the market will have ups and downs, but will continue a slow long-term uptrend. We may have rough periods of adjustment -- like we are currently seeing in housing -- but that doesn't mean that the fundamentals have changed.

Articles like this can be a good contrarian sign. As writers predict the end of stock market gains, it may be a sign that we have reached the bottom.

Kevin Kersten is an Stock and Options Analyst with InvestorsObserver.com. Disclosure note: Mr. Kersten owns and/or controls a diversified portfolio of long and short positions that may include holdings in companies he writes about.

Is the bull market over? originally appeared on BloggingStocks on Wed, 05 Mar 2008 11:00:00 EST. Please see our terms for use of feeds.

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Unemployment hits 5%, and the Dow nosedives 256 points

Joseph Lazzaro — Fri, 04 Jan 2008 18:57:00 EST

Filed under: After the Bell, Bad News, Economic Data, DJIA

Now that's not the way to close out the first week of the new year: for the week the Dow fell 4.3%, the Nasdaq declined 6.3% and the S&P fell 4.5.%.

Further, there are various ways to interpret the Dow's 256-point drop to 12,800.18 Friday.

[The Nasdaq closed down 98.03 points to 2,504.65, the S&P 500 closed down 35.53 points to 1,411.63. Oil fell $1.27 to $97.21, gold declined $3.40 to $865.70, and the 10-year U.S. Treasury closed at 3.85%.]

Obviously, Wall Street's current consensus - - its chief culprit - - is the December 2007 job report, announced by the U.S. Labor Department, which indicated that the U.S. economy created just 18,000 new jobs - - a whopping 52,000 shy of the 70,000-job estimate.

Continue reading Unemployment hits 5%, and the Dow nosedives 256 points

Unemployment hits 5%, and the Dow nosedives 256 points originally appeared on BloggingStocks on Fri, 04 Jan 2008 18:57:00 EST. Please see our terms for use of feeds.

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Five triggers for a catastrophic market decline

Zac Bissonnette — Thu, 02 Aug 2007 10:50:00 EST

Filed under: Indices, Market Matters

In case anyone is still feeling bullish, Paul Farrell of MarkeWatch has produced a list of 20 triggers that will end what he calls "the aging bull." Here are some of his suggestions for possible "tipping points" that will bring an abrupt end to all this fun. Here are some of the ones I think could be particularly catastrophic:

Trade imbalance
Real Estate markets problems
Skyrocketing Oil
Surging consumer debt
Issues of international credibility

Interestingly, I disagree strongly with his concern about "Washington politics in endless gridlock." Isn't that a good thing? If the best government is the least government, what could be better than a bunch of bureaucrats in Congress arguing and accomplishing nothing -- i.e. not spending our money?

Take a look at the list and let us know what you think the top concerns are.

Five triggers for a catastrophic market decline originally appeared on BloggingStocks on Thu, 02 Aug 2007 10:50:00 EST. Please see our terms for use of feeds.

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Market sees biggest upswing in almost a year: Recession back in closet

Georges Yared — Wed, 13 Jun 2007 17:54:00 EST

Filed under: Indices, Economic Data, S and P 500, DJIA

The Dow Jones Industrial Average rose today by 187 points, a 1.41% rise. The NASDAQ rose by 32 points, or 1.28% and the vaunted S&P 500 Index by 22 points or 1.52%. The markets were relatively benign until the details emerged from the Federal Reserve's Beige Book.

The Beige Book is released eight times per year, and is the collective wisdom of the 12 different Fed Governors. The news was better than expected, and the 10-year treasury note, which was topping out at 5.25%, began to sink and investors re-focused on the equities market.

The details from the Beige Book report was just the music the equity investor wanted -- needed -- to hear. Capital goods orders were picking up and the job market was, indeed, stabilizing. To boot, the real symphony continued when the Fed indicated there was no upward pressure on wage prices, thus stemming one of the legs of inflation. Consumer spending appears to remain in a healthy pattern, with general retail sales up a surprising 1.6%, versus the expectations of 0.8%. The consumer is still in a position to sustain economic growth.

The indicators from the Federal Reserve basically put the "R -word": Recession, back into the closet.

Continue reading Market sees biggest upswing in almost a year: Recession back in closet

Market sees biggest upswing in almost a year: Recession back in closet originally appeared on BloggingStocks on Wed, 13 Jun 2007 17:54:00 EST. Please see our terms for use of feeds.

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Bull or Bear Market: Aiming at Q3

Gary Sattler — Fri, 08 Jun 2007 10:30:00 EST

Filed under: Forecasts, Management, China

Market sentiment seems to be favoring the bears again. My cursory research indicates that 65% of investors are again thinking about an impending decline while the other 35% are still cautiously optimistic. It's only seldom in these last few weeks that I came across the occasional person who insists that the bull charge, which began in 2002, shows no signs of relenting. Just the fact that there has been a noticeable increase in the past few weeks (even before these past few days of declines) in the volume of discussions and analysis regarding how to recognize a bear market is coming, how to prepare for it's arrival and what to do when it gets here, signals to me that investors are getting skittish. The funny thing is that it's almost a universally accepted fact that no one can truly predict a bear market turn.

I gave a warning a couple weeks prior to the last contraction that I thought one was coming. That quick downward slide in fact happened. I'm now going on record again as declaring that the bear is coming for another swipe. I expect that this time the cut will go deeper and bleed a bit longer. (Indeed, I originally wrote this post after Tuesday's sell-off, but already this downturn is longer and deeper than the last). Last time around, I sent you that message based solely on gut instinct with little else to back it up. This time, however, I'll clue you in to some of my thinking.

Continue reading Bull or Bear Market: Aiming at Q3

Bull or Bear Market: Aiming at Q3 originally appeared on BloggingStocks on Fri, 08 Jun 2007 10:30:00 EST. Please see our terms for use of feeds.

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Is the Mini-Bear market a real bear, or just a hamster?

Jon Ogg — Thu, 07 Jun 2007 18:50:00 EST

Filed under: After the Bell, S and P 500, DJIA

DJIA 13,266.73; -198.94 (-1.48%)
S&P500 1,490.72; -26.66 (-1.76%)
NASDAQ 2,541.38; -45.80 (-1.77%)
10YR Bond 5.10%; +0.13%

We have gone from a raging bull market to what has felt like a sudden bear market in just three days. The DJIA has seen 3 consecutive days with triple-digit drops. Since the highs on Monday June 4, the Dow is down 456.64, although this is only a 3.327% drop. The old rule of thumb for panic buying on severe market drops is after a 5% drop, and that would require the DJIA to reach 13,037.20. Keep in mind that the numbers are right, but the theory of buying the 5% dip is more rough in nature and not exact.

Today you can chalk up to a very negative outlook from Bond mogul Bill Gross of PIMCO. PIMCO recently added Alan Greenspan to its advisory board, and Mr. Gross didn't waste any time in taking it upon himself to begin sounding like the ex-Chairman of the Fed. You can see the summary comments if you wish, and some of the projections are odd. The old 4.0% to 5.5% range for the 10-year US Treasury Note is now moved up to a wider 4.0% to 6.5% range. This is over a 3 to 5 year period, and the article does discuss the expected weakness ahead combined with commodity inflation ultimately being at-risk for pass-throughs.

It will be interesting to see if Jim Cramer maintains his high DJIA target for the year and if he bails on his top 2007 picks, but seeing as that he just gave his DJIA component targets it would be hard to imagine a real change of heart. Here are Cramer's New 4 Horsemen of Technology he just gave last night.

These drops often feel severe, but unless it's a scenario of "it's different this time" then these may just be bigger opportunities.

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Is the Mini-Bear market a real bear, or just a hamster? originally appeared on BloggingStocks on Thu, 07 Jun 2007 18:50:00 EST. Please see our terms for use of feeds.

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Private equity shifts gears to technology

Eric Buscemi — Tue, 05 Jun 2007 10:30:00 EST

Filed under: Ciena Corp (CIEN), Sun Microsystems (JAVA), Palm Inc (PALM), Bargain Stocks

Private equity and investors in general are beginning to open up their pocketbooks for technology. Palm Inc (NASDAQ: PALM) announced a deal with Elevation Partners which agreed to invest $325 million for a 25 percent stake in Palm.

Also, Avaya Inc (NYSE: AV) is being picked up for a nice premium, $17.50 per share or $8.2 billion by Silver Lake Partners and TPG Capital.

Ciena Corporation (NASDAQ: CIEN) went to market and issued $450 million in convertible debt. And earlier this year, Sun Microsystems Inc (NASDAQ: SUNW) picked up cash from Kohlberg Kravis Roberts in the form of a convertible stock.

Slowly but surely, private equity and investor interest in technology is picking up. This could be the very early stages of a big bull market run for tech stocks.

Private equity shifts gears to technology originally appeared on BloggingStocks on Tue, 05 Jun 2007 10:30:00 EST. Please see our terms for use of feeds.

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Sentiment: Pessimism still reigns

Eric Buscemi — Mon, 04 Jun 2007 13:45:00 EST

Filed under: Analyst Reports, Industry

Despite the U.S. stock market's continued rally, investors are becoming increasingly more pessimistic.

The AAII Index registered 33% bulls and 45% bears, less bulls and more bears as the market goes higher and higher.

Barron's was also filled with negative sentiment. Steve Leuthold, of Leuthold Group, had little positive to day about the market. In addition, Barron's back-page editorial wrote of the structure bear market and high inflation of the 1970s. Further, even this week's book reviews spread negative vibes. Bubblicious, a history of bubble mania (which sounds like an excellent read), wrote of wildly over extended markets.

Mike Santoli titled his piece "The Bull Battle Fatigue," evidence of which is hard to find since the bull market is showing little sign of ending its upward ascent.

Despite a very good market for 2007, few want to suggest that this is simply a good and healthy bull market. Every rally leads to more and more pessimism.

Wait for the classic sentiment indicates to show too much optimism before becoming negative on the market.

Sentiment: Pessimism still reigns originally appeared on BloggingStocks on Mon, 04 Jun 2007 13:45:00 EST. Please see our terms for use of feeds.

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