>>Fed cuts rates and prints money, stocks go up. <g> <<
Yeah, the reruns get old, thank goodness for DVD rentals. <g>
Actually I find it amazing how so many people think one economic report will prompt AG to cut rates. Consumer spending is still outpacing earnings, margin rates are still at historically high levels and at least until this week's employment report proves otherwise, employment is still the highest it has ever been in 30 years. Until J6P stops maxxing out his credit cards, getting home improvement loans to buy the dip and going on margin I doubt AG cares much about lowering rates to ease recessionary fears. Add to that the corporate bond yield spreads and we still have the makings for bad things ahead. I doubt AG wants to play his trump card this early. Let's see what the employment report shows this week before we count on AG being Santa Claus instead of the Grinch. We also have to keep in mind that we had enough of a market rise over the last couple years to equal 3 years of normal market gains. We could trade flat for a looong time and still be in a bull trend long term same as the fact that we could drop to the 2500 area on the NASDAQ and still be in the bull channel from the mid 90s on and much lower than that to be in the channel from the late 80s. We don't enter long term bear territory until levels that most people cant even fathom.
I think right now we are doing exactly what AG wants. We are trading flat, GDP is still growing, people are still happy and stock prices are pausing while earnings attempt to catch up to these outlandish valuations. If they could just shoot a few of the generals, all would be fine with he world and we could start moving up at a slower pace again. Unfortunately, we are seeing too many people still chasing whatever is moving.
I personally am looking for a short term up continuation possibility but still think we head lower in a few weeks, probably to new lows although probably only slightly so. I think we will bottom late rather than early or on time. I am targeting December for the buy in point then a mid term rally to a real ugly summer that will make this look like a walk in the park. Remember that we haven't seen the effects of the last rate increase yet on earnings and all that corporate debt is going to have to come home eventually.
I hate to sound like a perma bear but I just don't see the FA that backs up a long term rally yet. I think some sectors are starting to get over sold but also think we have far more fluff than we do bargains. As I pointed out on our site, QCOM earned 23 cents last year yet expectations for this quarter are only for 25 cents due for release this week. Less than 10% growth equates to a PE of over 80? Give me a break! I guess you aim low enough and they might be able to beat expectations to give the cheerleaders on CNBC something to hype about. Of course, I never underestimate the stupidity of the American public and it will probably work.
IMO, the election is clouding things up a bit. let's see what happens in two weeks after the election is over and the Fed has spoken. Until then, steal what you can during the day and don't be greedy or hold over night.
Good Luck,
Lee |
