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Strategies & Market Trends : Can you beat 50% per month? -- Ignore unavailable to you. Want to Upgrade?

To: Smiling Bob who wrote (5290)	1/3/2003 10:56:19 AM
From: Smiling Bob	Respond to of 19256

Five Reasons to Watch Financial Stocks in 2003 By Jim Jubak MSN Money Markets Editor 01/03/2003 08:59 AM EST Click here for more stories by Jim Jubak Last year around this time -- Dec. 22, 2001, to be precise -- I wrote that anybody who wanted to predict the direction of the stock market should watch the airline sector. If airlines were in rally mode by February, it was likely that the bear market was behind us. If the sector's stocks went into retreat, it meant tough times for the entire stock market in 2002. It turned out that airline stocks were a great indicator -- and a lousy investment. The sector gave back the gains it had made after hitting lows in the aftermath of the Sept. 11, 2001 terrorist attacks and then kept on giving. For example, Continental Airlines (CAL:NYSE - news - commentary - research - analysis) rallied from its Sept. 21 low of $14.66 to hit $34.80 on March 4, before beginning a retreat that took the shares down to a low of $3.65 on Oct. 9, 2002. Since then, the stock has rallied along with the rest of the market. This year, instead of watching airlines, investors looking for an indicator of market direction should be watching financials. Why this sector this year? First, this is historically the strongest season for financial stocks. If financials can't climb now, it's unlikely that they'll be able to do so later in the year. From January through May, bank stocks go on a roll -- the average return for the S&P Banks Index during the period, according to the Stock Trader's Almanac, has been 9.7%. Securities brokers and dealers knock the cover off the ball from December through April, with the Securities Broker Dealer index up 24% on average during that period. Second, the sector is near one of those traditional stock market sweet spots. In recent fourth-quarter earnings reports, both Goldman Sachs Group (GS:NYSE - news - commentary - research - analysis) and Lehman Brothers (LEH:NYSE - news - commentary - research - analysis) talked about how tough business would be for the first six months of 2003 but said they expected a pickup in the second half. For Goldman Sachs, for example, Wall Street is now expecting just 5% earnings growth in the first quarter of 2003 and just 7% in the second quarter before business picks up to produce a 15% increase in earnings per share for the full year. Page 2 Since Wall Street typically anticipates improving earnings stories by about six months, these stocks should climb in the first part of 2003, if investors find any credibility to these projections at all. If the stocks don't climb, it's a strong indicator that investors remain deeply skeptical of projections for improved economic growth in the second half of 2003. That would be bad for stocks in almost all market sectors. Investors and War Worries Third, the sector is good at filtering out some of the short-term worries now bedeviling the stock market, and it's very sensitive to more important long-term trends. The day-to-day fluctuations in the price of a barrel of oil, for example, as investors vacillate between "Yes, we're going to war with Iraq soon" and "No, we're not going to war with Iraq soon," has much less impact on this sector (banks don't run on oil, although they may run on oil dollars) than it does on energy-intensive sectors such as the airlines. Similarly, public attitudes toward travel, which also seem to fluctuate daily with the latest war rumors, produce immense volatility in travel and hospitality stocks but not among brokerage equities. On the other hand, the financial sector is extremely sensitive to important long-term trends, such as the direction of interest rates and the potential for inflation. It will be hard for the stock market as a whole to do well if rates start to advance at more than a creep and if inflation isn't as dead as everyone now fears it is. The financial sector, however, is likely to react even before the general market in these areas. Fourth, everyone on Wall Street now watching the stock market's behavior is looking for a group that has the fundamental prospects and market capitalization to lead the market upward. The consensus is that the technology sector, one traditional candidate, isn't up to the job this time because of anemic growth projections for 2003 and still-hefty valuations. The financials get the nod from many Wall Street professionals as the sector with the most potential for leadership. If financials go up, many on Wall Street will see that as a sign that the market now has the leadership to advance further. If financials falter, a lot of money will remain on the sidelines. thestreet.com

To: Smiling Bob who wrote (5290)	1/3/2003 12:36:10 PM
From: Smiling Bob	Read Replies (1) \| Respond to of 19256

COF- 31.42 ask if need be, u can exit, but more coming today and next week DOW losing blood 8576 (edit)(want some GS profits?? 69.7 ask)) Message 18396526 To:scottonstocks who wrote (5289) From: scottonstocks Friday, Jan 3, 2003 10:15 AM View Replies (2) \| Respond to of 5297 COF- avg up or enter new short 32.10 bid edit GS-70.31 bid short again Message 18393197 ...COF- 31.37 short Good for at least 1.5- 2 sometime in the next few days, once we get past this Jan euphoria