OK, I will just say right up front, I have lost contact with this market. I do not know what is going on any more. With the last of the '98 earnings done, 1998 after tax earnings just dropped to the lowest level as a whole in the last 9 years. Oil prices have gone up 60% in the last few weeks and Friday's unemployment report showed the tightest labor force in 30 years. The Bond rate is pushing 5 3/4 percent so basically this is screaming inflation and bad corporate earnings. From a fundamental point of view, the stock market should be crashing as I write this. Instead, as of last night, GLOBEX futures are showing the NASDAQ up 27 points and the S&P up over 7 points which implies that the DOW should rally 100 points on Monday's open. WHAT IS GOING ON !!! New lows on the NYSE were above 90 and over 150 on the NASDAQ, need I say any more. The thin rally just got thinner.
Why is it that no matter what the employment report says either up or down, the press spins it as positive? Layoffs don't mean signs of trouble, it means that the work force is weak thus inflation concerns are down. A tight employment force isn't a sign of inflation, it means strong corporate growth. Thursday, the outlook for chips went down the toilet. Asian fabs just ramped up production and RAM prices started falling again over the last couple weeks. The market affect? MU went up 2 points.
This market has scizophrenia and I have to admit I am totally lost now. The rising bond rate, oil prices, labor force and A/D ratio tell me this is it, it is over yet the futures? Some of my favorite stocks that are sound growth companies that haven't missed earnings or had expectations reduced etc have gone from over valued to seriously undervalued. My 35% growth favorite closed Thursday with a PE ratio of 14. Meanwhile the high flyers went higher. I have a chart of the advances and the declines seperatly on all the exchanges. They are clear in their trends and they are not in the bullish direction.
I am now following this market as a hobby only since I can't seem to find anything trading at near it's real worth. If it is a bargain, it becomes more of a bargain the next week. If it is over priced, it gets more over priced the next week. Foreign money and Mo Mo riders now rule this market and value has been thrown out.
How much longer can this go on?
Just venting I guess. Good Luck,
Lee |
