The fun has just begun. Those people who have understood that the world wasn’t coming to an end, realized we were overdue for a dead-cat bounce, and acted on my previous commentary are now making money.
The fun I am referring to is the constant misdirection coming from the the Wall Street Pros and other talking heads we hear each day. These experts can’t seem to decide whether to be bullish or bearish. Ultimately for every bearish expert you can find a bullish expert that contradicts him/her. One thing that does stand clear is Doom and Gloomers are still looking for a retest of March lows – yikes. What to do, what to do? . Basic Market cons – the basic argument for a pullback is that we are trading at high multiples to 2010 earnings P/E’s. We have taken a huge move off the lows. All the major Indices and many of the critical stocks and sectors are approaching their 200-day moving averages. Basic Market pros- we are still so ridiculously over-sold that none of the above cons really matter. Do we have any ideas about 2010 earnings? The answer is no. The liquidity pumped into the financial markets along with investment monies waiting on the sidelines may attract buyers based on fear that they will be missing the potential big move up. Shorts have been buying stocks back and are getting increasingly nervous. Large Cap Tech has been starting to show signs of life off the bottoms. We seem to be seeing a lot of individual stocks and ETF’s forming their own versions of reverse head and shoulders bottoms. This would be opposite what we saw forming through June-August of 2008. Take a look at some chart data back then.
Conclusion- Only buy stocks that are still close to their short-term moving averages like the 21-day or 50- day, respectively. Do not buy stocks that are extended beyond 5% of the 50 day. Definitely do not buy stocks close to their 200-day moving averages unless it is sitting on top of it. Lets take the attitude that we will have trouble breaking up through the 200 day moving averages on the major Indexes using the S&P as our focus index. Yesterday’s action seems to indicate that we should hit the 200 day on the S&P as it appeared to puncture through some short-term resistance. We get a follow through today to the upside lets expect a to hit the 200 day moving average on the S&P. Then pullback. If we fail today I will reconsider my position and assume we will take a breather into next week.
I’m short on time regarding posting Individual stocks for review so please give us a call at 1-888-592-7575.
This entry was posted
on May 5, 2009 at 6:00 pm and is filed under Weekly Market Commentary.
You can subscribe via RSS 2.0 feed to this post's comments.
Stock Market Analysis – Week of 5/4/2009
The fun has just begun. Those people who have understood that the world wasn’t coming to an end, realized we were overdue for a dead-cat bounce, and acted on my previous commentary are now making money.
The fun I am referring to is the constant misdirection coming from the the Wall Street Pros and other talking heads we hear each day. These experts can’t seem to decide whether to be bullish or bearish. Ultimately for every bearish expert you can find a bullish expert that contradicts him/her. One thing that does stand clear is Doom and Gloomers are still looking for a retest of March lows – yikes. What to do, what to do? .
Basic Market cons – the basic argument for a pullback is that we are trading at high multiples to 2010 earnings P/E’s. We have taken a huge move off the lows. All the major Indices and many of the critical stocks and sectors are approaching their 200-day moving averages.
Basic Market pros- we are still so ridiculously over-sold that none of the above cons really matter. Do we have any ideas about 2010 earnings? The answer is no. The liquidity pumped into the financial markets along with investment monies waiting on the sidelines may attract buyers based on fear that they will be missing the potential big move up. Shorts have been buying stocks back and are getting increasingly nervous. Large Cap Tech has been starting to show signs of life off the bottoms. We seem to be seeing a lot of individual stocks and ETF’s forming their own versions of reverse head and shoulders bottoms. This would be opposite what we saw forming through June-August of 2008. Take a look at some chart data back then.
Conclusion- Only buy stocks that are still close to their short-term moving averages like the 21-day or 50- day, respectively. Do not buy stocks that are extended beyond 5% of the 50 day. Definitely do not buy stocks close to their 200-day moving averages unless it is sitting on top of it. Lets take the attitude that we will have trouble breaking up through the 200 day moving averages on the major Indexes using the S&P as our focus index. Yesterday’s action seems to indicate that we should hit the 200 day on the S&P as it appeared to puncture through some short-term resistance. We get a follow through today to the upside lets expect a to hit the 200 day moving average on the S&P. Then pullback. If we fail today I will reconsider my position and assume we will take a breather into next week.
I’m short on time regarding posting Individual stocks for review so please give us a call at 1-888-592-7575.
Steve Pizzuti
This entry was posted on May 5, 2009 at 6:00 pm and is filed under Weekly Market Commentary. You can subscribe via RSS 2.0 feed to this post's comments.
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