|
Navarro's Market Rap: Pulling the Plug
Last week, I called for a continuation of the current Xmas rally but warned that possible bad or mixed news on the Black Friday/Monday front might put a crimp in your bullish plans. Sure enough, the news was less than stellar. While the NASDAQ managed to eke out a small gain, the S&P 500 fell.
After giving some of my fat November gains back, I decided to pull the plug early on this rally (see Peter's Portfolio below). I'd rather sit on the sidelines with a few positions that ruin a good year. My thinking goes along the following lines:
Yes, the economic news remains good. ISM looked great. New home sales looked great. GDP burst over 4% to 4.3. And oil prices are falling. The problem with all of this is that the news is so good, it is unlikely to deter the Fed from continued rate hikes. So there is a dangerous game of chicken being played between the data and the doyens at the Fed. If the Fed wins, we all lose….
Peter's Portfolio: Shorts and Longs
I pulled the plug on ARDI, DSS, SVA, LVLT, GIGM, AIRN, QQQQ, and VISG. All were money winners showing strong technical deterioration. I'll
put' em on a watch list and maybe buy-em back, but for now, it's adios.
I'm holding ASTM and AMKR. I went short QQQQ with some
trepidation. I added a ceramic armor play DHB on strong technicals. I added TWP on a "Peter Lynch" type of play: A friend of mine raves about the product this company makes – a composite flooring that blends wood and plastic that is used in outside decking. Technicals look good. This stock is at $23 off a year low of $18.77 and miles from a year high of $54. Let's see if it knows how to run. Finally, CPTCQ.OB shed its "Q" and, out of bankruptcy, took a nice little 10 cent sprint as CPTC. I'm hanging on to my semi-big position….Now if they can only dump the CEO and put it some new management to take this company to the next level….
|
|
The Week Ahead: Home Game
Let's see if productivity can hold on to its 4% rate or whether a downward revision might stir inflation fears on Tuesday. Other than the ISM service index on Monday and the U Mich sentiment numbers on Friday, it's a light week. That's not good for a market where bullish sentiment is high and needs a goose from the data to reach the next level.
Hedging Your Bets With Matt Davio: Ho, Ho, Ho
The presents have been laid under the tree, the kisses have been stolen under the mistletoe and the eggnog has been polished. That's what I feel about the past 6 weeks about this market. Particularly, Thursday's market was very unique in that every single US index was green for the day, wire to wire. I am talking bonds, stocks, gold, energy, commodities, interest rates, etc. The only exception to this party was the Volatility indices which were down 7.5%. So we continue to drip down and I contend there is now more risk on the downside then upside potential going into first quarter of 2006. Here are some thoughts on this.
1) Long term prospects for consumer spending remain in doubt.
2) Falling prices at the pumps give shoppers extra dollars to spend at the mall during this critical shopping season.
3) Consumer spending will cool next year.
4) The current rally has pushed up against the August highs.
5) Rally has been less than impressive due to poor performance in the advance/decline line.
6) The retail group has enjoyed a nice rally since the October lows, and profits should be taken on gains into the holiday season.
7) Near term, the stock market (SP) is to remain in a trading range with risks to the downside of 1160, and rewards to the upside 1270.
8) Trends in the major indexes remain bullish and support rally attempts into year-end.
9) Skepticism is waning, and a significant overbought condition has emerged.
10) The next significant move may be towards support levels (1200 S&P, 2120 NASDAQ).
11) The lack of confirmation from the market breadth data suggests the recovery highs in the indexes will remain substantially intact
|
