Commentary--Elaine Garzarelli for 11/22/00...
garzarelli.com
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>>>Stock market analysis for November 22
We have gotten no relief from the correction in the stock market even with the generally favorable month of November more than half way over.
Investors partly blame the volatility of the markets on the election uncertainty.
We believe that may be part of the problem -- but more importantly as we wrote in our newsletter a couple of weeks ago, the number of bullish advisors has not improved and remains HIGH.
...This is one of our 14 stock market indicators.
...Most of our other indicators are in bullish territory but this one remains neutral.
...We found when this indicator drops to a level below 40%, it is bullish for the stock market. It means more investment advisors have turned negative and usually have more cash on the sidelines (waiting to be put back into the stock market) -- a contrarian indicator.
...Currently, the level stands at 66% (4 week average is 63%).
Overall, our indicators remain NEUTRAL and may turn positive when the sentiment indicator improves, the Fed eases, or long term rates decline further.
Until then it is better to invest in sectors rather than the overall index.
Because we see a divergence in group valuations, our strategy remains to be fully invested in sectors such as energy, financials, foods, homebuilders and building materials, and some technology (especially semiconductors where some issues are down as much as 60%).
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Interest rate/bond market analysis for November 22
In addition, we recommend bonds as part of one's asset allocation as well.
We predict the 10-year yield to decline to 5.3% to 5.4% by the end of next year. Currently the rate is 5.60%.<<< |
