Robert, we have now seen the bounce. From here, I think the markets will be nervous for a while. The short-term trend is slightly bullish (oversold) but the mid-term trend is uncertain. We are in the second week of the good earnings reports period that normally helps to boost stocks. The market is acting unsettled. While real strong results often propel stocks higher, just meeting expectations is often not enough, sending investors into profit taking (buy on the rumor, sell on the news). When a company disappoints to a minor degree that is often reason for a blood bath. This type of trading action is more indicative of a top than a bottom but the degree has shifted in the short-term slightly more positive, IMO. But once we get past the good earnings reports, there may be a lull in positive events and a move to retest recent lows.
Many analysts and advisors see the tremendous divergence and advise buying beleaguered stocks and sectors, particularly if they get hit even harder despite their being cheap already. During the past couple days we have seen a minor closing of the divergence but small-mid cap stocks are hardly roaring back into favor yet.
I think the theme through at least the 1st quarter of 2000 will remain the growth stocks. Some of the enthusiasm is muted but this will stay the most exciting place to be. Looking at what sectors were hot (or not) over the past twelve months, the Internet sector came in second behind wireless communications by a wide margin. I think the Internet retailers and portals will do well, some Internet IPOs will continue to defy logic, and the wireless communications stocks should continue to rock. Wireless Internet devices will be BIG really BIG. High bandwidth wireless Internet service is coming (hopefully to my Seattle area community). One other area that is interesting is the investment and banking industry. Congress repealed the law that keeps brokers from offering full banking services, clearing the way for a flurry of mergers and acquisitions. The new model for banking and investing will become single stop service for all your needs, including loans (and insurance?).
Happy investing! |
