Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Stock Attack -- A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: AllansAlias who wrote (26822)	8/4/2000 2:47:02 PM
From: OX	Respond to of 42787

fyi, from briefing.com... Stock Brief ___________________________________________________________________________ Updated: 04-Aug-00 Seeing Through the Fog [BRIEFING.COM - Robert Walberg] A fog has descended upon the market, making it difficult for investors to see their way. A short time ago, the street was convinced that the Fed would remain on hold again in August. But a stronger than expected GDP report quickly rekindled rate fears. Just weeks ago, investors awaited the Q2 earnings numbers in hopes that another strong quarter would propel the indices back to their highs. But traders grew increasingly nervous as a number of high profile tech companies issued warnings. Hope gave way to fear; fear that a slowing economy will adversely impact future earnings. Where optimism once reigned, doubt now resides. Blinded by the worries of higher rates and slower earnings growth, buyers have faded into the background. Don't expect them to remain there long, however, as the fog will lift soon enough, and when it does investors will realize that their fears were unfounded. Briefing.com's optimism stems from the following: 1. Fed Done Tightening: When we argued immediately after the May rate hike that the Fed was done, we stood virtually alone. But the street quickly came around to our view after the Fed opted to move to the sidelines in July. Whether Greenspan & Co will leave rates unchanged in August is back up for debate after the GDP numbers. However, today's employment figures will carry much more weight in dictating future policy action than the GDP figures. Barring a much stronger than expected jump in nonfarm payrolls and/or a big drop in the unemployment rate, Briefing.com convinced Fed will stay put and wait to see the full impact of its recent hikes. As rate fears subside so will investor caution. 2. DJUA: The Dow Jones Utility Average recently established a new 52-wk high... New highs in the DJUA and bear markets don't go together... Maybe it's because the DJUA often leads rates...In other words, a rise in the DJUA typically precedes a drop in the long-bond yield... And declining rates are good news for stocks. 3. Earnings: Earnings growth is likely to slow by year end. So how is that good news you ask? By itself it's not, but recent declines (particularly in tech) overstate the potential slowdown. Growth will remain strong especially in the financial and technology sectors. Traders likely to breath sigh of relief just as long as comparisons don't stink. And stink is not the word we would use to describe yoy growth of 20% or better. 4. Value: For the first time in a few years, there is value throughout the market... Retail, banks, insurance, health care, oils, many of the deep cyclicals and even select tech names look good at the moment. The chip sector is particularly attractive in light of its recent drubbing. With value in so many areas, participation in the next leg of the advanced to be more broadbased. 5. Moving Averages: The DJIA, S&P 500 and Nasdaq Composite are all hovering near their 200-day moving averages... Over the past several years, a move back to the long-term moving averages has represented a good (re)entry opportunity. Given the still sound fundamental backdrop of historically low inflation/rates and historically high earnings growth, no reason to think that indices won't bounce off their moving averages (at least) one more time. 6. Cash: Investors both big and small have plenty of cash to put to work. As soon as the market starts to build any momentum, money will flow off the sidelines and into stocks, thereby providing additional fuel to the rally. 7. Best Alternative: Finally, the US stock market remains the best game around. Bonds should do fine as rates come down, but they won't keep up with stocks - especially once the marketplace concludes that the Fed is done. While we don't expect another year of 80%+ gains for the Nasdaq, we do see brighter days ahead for the market. Maybe not today, maybe not tomorrow, but soon. Robert Walberg