Monday, Tuesday, Points of Interest
Monday was simply a rest day. Stocks that we follow came in with few acting outside of the way that winning stocks act. It was enough to keep the naysayers happy. They probably won't get much more than that. One might think that seasonally the market should pause further. The first quarter results are mostly announced so that stimulus is off the table. And, as we head to the back end of the quarter, typically earnings pre-announcements are made and they are usually negative in tone. So we ought to be adrift to some extent.
But no, that is not what we are seeing. The market continues challenge new highs and old highs alike. The S&P, 1512 now, is inching closer to the 1553 all time high from March 2000 - just 2.7% away - while the Dow, Mid Cap, Smalll Cap and NYSE all are at/within a day's trade of new highs and have been in new high ground for years/months. Interesting to note that the Russell 1000, the true large cap index, is just 0.38% off its all time peak also set in March 2000. So I would call that good confirmation of the large cap market. Even the Dow Theory camp can be happy as the Transports have set a record high a few weeks back, confirming the Industrial's strength. One of the few things that is a negative is that bearish advisors are towards the low end of the range and that suggests more rampant bullishness. If everyone is bullish, who is left to buy? So sentiment could be a concern but overbought markets can stay that way for an extended period of time and we haven't seen that go on for too long (yet). On the plus side of sentiment, odd lot short sales are at the high end of the range and usually this indicator is contrarian. Another sentiment indicator may be the sum total of Wall Street analyst's ratings. In May of 2000 and May 2007 there were reportedly the following breakdown of ratings:
..........................2000 ....2007
% rated buy.....73.9% ...46.4%
% rated hold....25.3% ...46.6%
% rated sell........0.8% .....7.1%
(this table may not appear cleanly on the blog so please struggle through it). It's well known that there were virtually no sell ratings during the 1990s bull market which was one thing that led to the analysts' scandal. That part is no surprise. But the buy and hold stats suggest a dearth of excitement from the analyst community. That's potentially a good thing and suggests much 'fire-power' on the sidelines. A good dovetail would be to find the % weighting in cash and short term bonds today at the large brokerages. Would like to see a 60-70% weight in stocks to support the notion that the public is not fully committed and has a way to go to be fully invested. (Data for the analyst numbers comes from the Gannett Journal News Business section today which is not the Wall Street Journal but still has the odd piece that's useful - see January 7, 2007 - "Geller sees Bull Market for Stocks".) The same paper reported that Bear Stearns wrote off its specialist unit and will take a $250MM charge. That's interesting for sure as markets are clearly changing to more electronic and less by hand/human intervention.
The most important thing to look at with the market is the stocks in one's portfolio. Today, PCU, PCG, OSG, DECK, SBS, GS, CI, AMX, NFS, ARW, SCI & AAPL (that last one doesn't quit) are all at or moving powerfully to new highs. Finally, SCHW, which we sold off a little - gotta throw that virgin into the volcano - is waking up and getting close to breaking out. The overall list is predominantly green. The red on the screen is also deserves careful inspection as it will be the source of funds to add to winners or to buy new names. JNJ, EL, OMX, DHR, & RAH are on the list for sale as they have broken down or lag the market more than is allowable. Managinng losses is certainly as important and likely more important than managing winners.
That's enough and all for today.
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this newsletter (article), will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Due to various factors, including changing market conditions, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter (article) serves as the receipt of, or as a substitute for, personalized investment advice from Geller Capital Management, LLC. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. A copy of our current written disclosure statement discussing our advisory services and fees is available for review upon request.
But no, that is not what we are seeing. The market continues challenge new highs and old highs alike. The S&P, 1512 now, is inching closer to the 1553 all time high from March 2000 - just 2.7% away - while the Dow, Mid Cap, Smalll Cap and NYSE all are at/within a day's trade of new highs and have been in new high ground for years/months. Interesting to note that the Russell 1000, the true large cap index, is just 0.38% off its all time peak also set in March 2000. So I would call that good confirmation of the large cap market. Even the Dow Theory camp can be happy as the Transports have set a record high a few weeks back, confirming the Industrial's strength. One of the few things that is a negative is that bearish advisors are towards the low end of the range and that suggests more rampant bullishness. If everyone is bullish, who is left to buy? So sentiment could be a concern but overbought markets can stay that way for an extended period of time and we haven't seen that go on for too long (yet). On the plus side of sentiment, odd lot short sales are at the high end of the range and usually this indicator is contrarian. Another sentiment indicator may be the sum total of Wall Street analyst's ratings. In May of 2000 and May 2007 there were reportedly the following breakdown of ratings:
..........................2000 ....2007
% rated buy.....73.9% ...46.4%
% rated hold....25.3% ...46.6%
% rated sell........0.8% .....7.1%
(this table may not appear cleanly on the blog so please struggle through it). It's well known that there were virtually no sell ratings during the 1990s bull market which was one thing that led to the analysts' scandal. That part is no surprise. But the buy and hold stats suggest a dearth of excitement from the analyst community. That's potentially a good thing and suggests much 'fire-power' on the sidelines. A good dovetail would be to find the % weighting in cash and short term bonds today at the large brokerages. Would like to see a 60-70% weight in stocks to support the notion that the public is not fully committed and has a way to go to be fully invested. (Data for the analyst numbers comes from the Gannett Journal News Business section today which is not the Wall Street Journal but still has the odd piece that's useful - see January 7, 2007 - "Geller sees Bull Market for Stocks".) The same paper reported that Bear Stearns wrote off its specialist unit and will take a $250MM charge. That's interesting for sure as markets are clearly changing to more electronic and less by hand/human intervention.
The most important thing to look at with the market is the stocks in one's portfolio. Today, PCU, PCG, OSG, DECK, SBS, GS, CI, AMX, NFS, ARW, SCI & AAPL (that last one doesn't quit) are all at or moving powerfully to new highs. Finally, SCHW, which we sold off a little - gotta throw that virgin into the volcano - is waking up and getting close to breaking out. The overall list is predominantly green. The red on the screen is also deserves careful inspection as it will be the source of funds to add to winners or to buy new names. JNJ, EL, OMX, DHR, & RAH are on the list for sale as they have broken down or lag the market more than is allowable. Managinng losses is certainly as important and likely more important than managing winners.
That's enough and all for today.
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this newsletter (article), will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Due to various factors, including changing market conditions, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter (article) serves as the receipt of, or as a substitute for, personalized investment advice from Geller Capital Management, LLC. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. A copy of our current written disclosure statement discussing our advisory services and fees is available for review upon request.
posted by David Geller at 10:38 AM
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