Ron, its too pat: market will tank in October, rally hugely end of year. expect the unexpected. either the market will rally off of this level, or the market will close in a downtrend in NOV/DEC. The four pillars of this market has been: 1. continue influe of $$, 2. low interest rates, 3. good earnings, and 4. confidence,
1. cash continues to flow into the market. retirement plans automatically invest billions each month into the market.
2. interest rates appear to have topped out, the biggest threat to inflationary pressures right now is energy prices, but the economy is much less dependent on energy pricing than it was in the 70's. still increased utility bills this fall will restrict consumer spending.
3. earnings remain decent. there will continue to be blow-outs and blow-ups. but all in all the companies are reporting earnings in line or beating. one caveat, many stock prices are priced for perfection, and any surprises will be whomped.
4. confidence. most people continue to believe in the growth of US economy and stock market. life is good. there would have to be several major disasters to change this perception.
conclusion. stay with good companies and what has been working with ones trading style. overloading in techs and flyers right now is riskier than normal. there are huge values in the drugs, financials, small caps, utilities, and airlines, money should be directed into these areas for investing. for flipping, place your bets. good luck all. larry |
