Market Commentary
Still Maintaining a Bullish Bias
Going through and re-reading my prior comments, I indicated that critical visibility was needed to help move the markets forward. Unfortunately, this critical visibility was not delivered in a timely fashion. Our newly elected President was M.I.A. in this regard. President Obama and his team did not take any actions in mid-February that clearly and decisively addressed the struggling financial systems, resulting in a corresponding dip in consumer confidence and triggering an additional sell-off. This sell-off brought the DOW down to 6600 and the S&P down to 680. In fairness, I’m not sure that even if the President made an attempt to provide additional commentary, investors would have given him the confidence and credibility needed to support the financial markets. I say this only due to his inexperience managing any and all aspects of such a critically broken financial system.
However, Fed Chairman Ben Bernanke did come through for the investment public by providing this critical hand-holding, confidence, and conviction to restore financial credibility in our leadership. The Fed Chairman provided this leadership by unveiling a multiple resource attack on several specific financial issues; targeting each issue with a distinct solution. The multifaceted approach the Fed has implemented isolated each issue, demonstrating depth, innovative thinking, and the beginning of control over the current financial distress. I am now a fan of Ben Bernanke. The jury is still out on our new administration, but I am seeing positive signs of this same innovative and refreshing solution-driven attitude. Unlike the media, I may be a fan of Timothy Geithner real soon for the same reasons.
Please remember that the rest of the economic world is in trouble, and although our economy is in trouble, the United States is still the safe haven for investment dollars. This puts a built in floor on our financial markets with overseas buyers always buying our markets for safety.
Positioning over the last several weeks in equities, with new resistance expected at 8000 and 850 respectively, looks positive for completion. This morning’s additional clarity regarding the creation of a liquid market for toxic assets is on the table. It appears that the financial markets are in approval of the initial plan and believe that this may create a profitable market for the buying and selling of these assets.
OK, here’s some food for thought.
Is it possible that, in the long run, this horrible financial and economic condition will produce an extremely positive economic windfall for our Federal government? Lets explore this idea a bit.
If the federal government has a huge domestic deficit and owes the world trillions in debt, it is possible that by investing and purchasing domestic assets for pennies on the dollar and re-purchasing long-term government paper from other countries at deep discounts, a huge financial windfall for the Federal government will result.
If the government managed to pull off the greatest economic comeback in the history of the world, while receiving substantial profits from its investments, it would seem logical that the U.S would have the financial liquidity and strength to invest in the repurchase of our global debt from countries still in a recession needing money. Hmm!- if I believed in conspiracy theories this could be the beginnings of a good one.
Sector talk
I wrote previously about my Google, Amazon, Yahoo theory – if these stocks start to perform and improve on an earning power (ALPHA) and technical basis, the overall markets will get better. I already see evidence that this is being achieved. I would like to add that, if technology starts to kick in, we will start to move up substantially. If you look strictly at the data, you cannot ignore that the sectors with the greatest earning power increase are the technology groups. In addition, you have Regional Banks, Restaurants, and Specialty Retailers picking up some steam. I posted several ideas of stocks in these sectors over the last several months. The Obama Healthcare plan put a scare into the healthcare sector and their stocks, but this could give us some select opportunities as well.
Stocks for consideration this week
Sector
Stock Symbol
Software
IGV
Beverage
CCE
Oil and Gas Drilling
PDE
Wireless Telecom
AMT
Packaged Food
MKC, HRL
Utilities, Multi
PCG
Intergrated Telecom
TWTC, CTL
Life Sciences
CRL
Heavy – Electrical and Equipment
ESE
Application Software
FDS
Semiconductor
XLNX
Thank you for your interest in Evaluvest.
Steve Pizzuti
Founder and Developer of Evaluvest
Author of Pizzuti Power
Stock Market Analysis – Week of 3/23/2009
Market Commentary
Still Maintaining a Bullish Bias
Going through and re-reading my prior comments, I indicated that critical visibility was needed to help move the markets forward. Unfortunately, this critical visibility was not delivered in a timely fashion. Our newly elected President was M.I.A. in this regard. President Obama and his team did not take any actions in mid-February that clearly and decisively addressed the struggling financial systems, resulting in a corresponding dip in consumer confidence and triggering an additional sell-off. This sell-off brought the DOW down to 6600 and the S&P down to 680. In fairness, I’m not sure that even if the President made an attempt to provide additional commentary, investors would have given him the confidence and credibility needed to support the financial markets. I say this only due to his inexperience managing any and all aspects of such a critically broken financial system.
However, Fed Chairman Ben Bernanke did come through for the investment public by providing this critical hand-holding, confidence, and conviction to restore financial credibility in our leadership. The Fed Chairman provided this leadership by unveiling a multiple resource attack on several specific financial issues; targeting each issue with a distinct solution. The multifaceted approach the Fed has implemented isolated each issue, demonstrating depth, innovative thinking, and the beginning of control over the current financial distress. I am now a fan of Ben Bernanke. The jury is still out on our new administration, but I am seeing positive signs of this same innovative and refreshing solution-driven attitude. Unlike the media, I may be a fan of Timothy Geithner real soon for the same reasons.
Please remember that the rest of the economic world is in trouble, and although our economy is in trouble, the United States is still the safe haven for investment dollars. This puts a built in floor on our financial markets with overseas buyers always buying our markets for safety.
Positioning over the last several weeks in equities, with new resistance expected at 8000 and 850 respectively, looks positive for completion. This morning’s additional clarity regarding the creation of a liquid market for toxic assets is on the table. It appears that the financial markets are in approval of the initial plan and believe that this may create a profitable market for the buying and selling of these assets.
OK, here’s some food for thought.
Is it possible that, in the long run, this horrible financial and economic condition will produce an extremely positive economic windfall for our Federal government? Lets explore this idea a bit.
If the federal government has a huge domestic deficit and owes the world trillions in debt, it is possible that by investing and purchasing domestic assets for pennies on the dollar and re-purchasing long-term government paper from other countries at deep discounts, a huge financial windfall for the Federal government will result.
If the government managed to pull off the greatest economic comeback in the history of the world, while receiving substantial profits from its investments, it would seem logical that the U.S would have the financial liquidity and strength to invest in the repurchase of our global debt from countries still in a recession needing money. Hmm!- if I believed in conspiracy theories this could be the beginnings of a good one.
Sector talk
I wrote previously about my Google, Amazon, Yahoo theory – if these stocks start to perform and improve on an earning power (ALPHA) and technical basis, the overall markets will get better. I already see evidence that this is being achieved. I would like to add that, if technology starts to kick in, we will start to move up substantially. If you look strictly at the data, you cannot ignore that the sectors with the greatest earning power increase are the technology groups. In addition, you have Regional Banks, Restaurants, and Specialty Retailers picking up some steam. I posted several ideas of stocks in these sectors over the last several months. The Obama Healthcare plan put a scare into the healthcare sector and their stocks, but this could give us some select opportunities as well.
Stocks for consideration this week
Thank you for your interest in Evaluvest.
Steve Pizzuti
Founder and Developer of Evaluvest
Author of Pizzuti Power
This entry was posted on March 24, 2009 at 2:27 pm and is filed under Weekly Market Commentary. You can subscribe via RSS 2.0 feed to this post's comments. You can comment below, or link to this permanent URL from your own site.