More Backing and Filling

It's a tougher day than yesterday so far but let's see where this ends up. Housing numbers are the reason for today's weakness - what a surprise that is. The overall market is soft but individual stocks in our portfolio act much better than the whole. That's the idea of a well managed portfolio! Take a look at AAPL, STRA, & PCU, to name a few. Strong names in uptrends, handled the recent break well, and are now back on top or close to it. That's a good additional test for anything we'd consider buying in the near future. Stay tuned.

When is the next Fed meeting?

Since the last post when the Fed announced and the market took off, we have been marking time. Today is another good tell on the market. Down 1% from the get-go the market held and rallied steadily to close up slightly on the day. It's a small gain but a big win. Of course there are sellers out there but the buyers are taking every opportunity they get to load up.
An article today blasted the former Fed chief for his reckless commentary about a recession. Let's face it, the market moved 20% in 8 months and some jawboning from his highness was about all that the market respected on the bearish side. That pause probably helped more than it hurt and judging by the NYSE composite and NYSE A/D line, it didn't hurt much at all.

Correction/Yesterday's News

The other day I mentioned that Fed futures were 50 bps below the target rate. They were only about 25 bps below. However, the idea that futures were slipping vs the target was the key point and today's Fed release suggests this is the right idea. Note how quickly the market has rallied from the announcement this afternoon. Buyers don't need many excuses now to buy. More and more the Feb 27 decline is taking hindsight shape as an "external" event. Subprime concerns are also becoming yesterday's news.

Index review

My favored index in this rally has been the NYSE. It's still below the Feb 26 peak but yesterday it broke above the recent trading range. However, the advance/decline line made a new high yesterday. There's a divergence here but its too early to say whether good or bad. Alan Shaw from Smith Barney used to say (in the 1990's) that markets led by the troops (NYSE, R1K, etc.)were healthier than markets led by the generals (the Dow, etc.). This market is clearly led by the troops as the average stock is continuing to steadily climb. Of course, we need the big boys to chime in, too, but the indication is a good one at least for now.
Bearish sentiment rose from approx 20% to 30% inthe past month, bullish sentiment dropped by a similar amount. That's also an encouraging sign.

Top of the Range

It's a week after that big reversal and the market has rallied about 3.5%. We are at the same level where sellers took over during the past 3 weeks so some caution is warranted. The Fed is meeting today and tomorrow and everyone seems to expect no action. But, Fed Funds futures have been edging lower and are about 50 bps below the target rate. The market usually leads the Fed so this should make us wonder if Bernanke et al are closer to easing than we think. There are signs the economy is cooling so perhaps we should take that idea seriously. Meanwhile the deals continue to flow as anticipated and there seems to be no end in sight. I believe that fact will be the driving force for the stock market in the months and year(s) ahead.
Through all of this investors need to have a solid plan of attack, well diversified, with plenty of upside potential through the purchase of leading stocks, not last market's leaders. This is our area of expertise. Feel free to contact Geller Capital directly for further information.

That was interesting

The market turned on a dime near its 50 day MA and rallied nicely. Market internals were favorable and this was an encouraging day. It is good to see that buyers can stage powerful rallies however, bears remain in control until we shake free of the downtrend. The stocks referenced in the earlier post led the market higher as did other names from our portfolio. Tomorrow will be interesting for sure. Stay tuned!

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Wrong assessment

I thought differently but the market has the final word. We sold off hard yesterday, harder today. Nice that the bounce came at the 50 day MA which is almost expected. Frankly, there's not a lot to be excited about here other than prices got cheaper. Too bad they went lower than last week. That suggests that the strength of the bears relative to the bulls is now more intense than it was last week. We'll see what happens from there. Watching some former leaders like aapl and goog - they hold up ok here - pcu is another one that has good support.

A Very Solid Day

After a weak opening stock prices straightened out and closed higher just like in the good old days. (i.e. prior to the feb 27 smash) The market internals that I follow were all good, too. This is yet another constructive day and interestingly the market has sort of resumed the uptrend of the past several months, albeit at a lower level. 20% up, 6% down looks and feels just like a bull market correction - sharp, fast, and severe - everyone seems to wait for the next shoe to drop but that doesn't happen and the feeding frenzy resumes. Of course, the market is still in a downtrend (for the time being) and the rally here is suspect in terms of its sustainability until it makes new highs and holds them. But for now it acts well.
Interesting analysis about up/down days in bull/bear markets. Since 1920, only about half of the worst % days in the Dow have occured during bear markets. Intuitively, one would think that it would be higher. In fact, since the stock market bottomed in 1933, there are have been two secular bull markets and two secular bear markets. During this time frame the S&P 500 tells a different story: looking at the worst 1% of all days (about 90), only about 25% occurred during bear markets. In modern market history, major down days seem to be in the territory of the bullish camp. This is not a reason to go long here but its another point to consider when thinking about Feb 27.

My aching back

Since Thursday the market softened and raised fear to so far unseen levels since the summer. Bearish sentiment rose nicely and we must see that before the market will move higher. At this point the process of recovery is in place and will take some time to build. Now is an ideal time to prune and update portfolios. My firms structured approach does this naturally and it is interesting to see which stocks are on the new buy list and what is coming out of the portfolio. Please visit our website for further info on this or contact me directly.

We wanted a global market and we have one. The U.S. markets were hit by external influences, namely China, and it was interesting to me to see how our market responded. Less the leader right now, stocks have pulled back towards key breakout points. Some find it scary, others know that markets ebb and flow. If this is a mere "ebb", then the subsequent flow is going to be where the big money is made. I believe that as things settle down, investors will look past the slowdown in this economy and see its inherent strength. Also of interest this past week is that almost everything seemed to fall in price, except bond prices and the US dollar. Markets look ahead and lower yields always end up mattering. We should not lose sight of that point.

Picking up a pair of socks off the floor can be enough to throw out one's back. This amazes me since I regularly work out with weights and that's never a problem. But a pair of socks? Ouch!

Business as usual

Major selloffs like Tuesday are nothing new. Deadcat bounces like Wednesday are also expected. But today's action (so far) says a lot about the resiliance and the bullish stripes on this tiger. While that may be mixing metaphors one thing is true: a 200 point decline on the opening for the Dow and similar activity in the major indices that easily turns to the positive is a very good sign. A two - three month consolidation of a 7 month rally would be a perfect setup to eliminate marginal bulls, build the bearish camp, and extend this rally to further new highs. Still cautious but listening to the market carefully and liking the sounds.