Good News?
Bear Market May Be Investor Opportunity
By Pierre Belec
NEW YORK (Reuters) - The best time to buy stocks is when everyone is incredibly bearish. Right now, with the media screaming about the market tanking and Wall Street gurus throwing in the towel, is it smart to go with the herd?
History shows that the stock market often fools everyone. When the majority of people are bearish, stocks turn around.
"With the intense pessimism and the wholesale bailing out by the 'Market Strategists' of the world, I believe the odds are high that the market low has already been reached," says Don Hays, president of Hays Advisory Group, an investment consulting firm.
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One of the neatest measures of the Street's pulse is the Arms Index, a 10-day moving average for the New York Stock Exchange Composite of all stocks listed on the Big Board. Devised by technical analyst Richard Arms Jr, the index tracks buy and sell orders to gauge the level of pessimism or optimism in the market.
Lately, the index has been giving one of its rare buy signals -- only the eighth signal in its 34-year history, said Hays. The volume of sell orders in declining stocks has been unusually high, which is saying there's intense pessimism among investors, which may presage a market bottom.
Hays says the index's strongest feature is its ability to pick market bottoms. But it can also pick market tops, as it did at the start of the market's crash in March 2000.
"The index has a phenomenal record, and it's batting a thousand," says Arms.
ca.news.yahoo.com
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Stabilization seen in U.S. manufacturing
Increased demand: Latest data surprise economists, buoy market
Peter Morton -- Financial Post
WASHINGTON - The recession-weary U.S. manufacturing sector may finally be pulling out of its slump as new factory orders edged up last month and the hard-hit U.S. Midwest manufacturing belt showed signs of a rebound.
The U.S. Commerce Department said there was an increased demand for electrical and transportation equipment, helping boost orders by 0.1% in July from a 2.9% drop in June and surprising economists who had predicted a 0.5% drop.
"The new data are pointing toward a bottoming out in the manufacturing sector, largely due to some recovery in non-high tech manufacturing," said Paul Kasriel, chief economist Northern Trust Co. in Chicago.
nationalpost.com |
