But more generally, we're seeing a follow through on a lot of the value buying that lifted us in the summer and it's creating some psychological support. |
Clearly, the market has been on hold with the events in Iraq, and we're now nearing a crisis deadline. Markets love to work with a balance of certainty. After several weeks of selling, we're now looking at some value hunting. |
I mean we've had a consolidation but we haven't penetrated any long term support levels, and so, as I said, we're in a period of commonality where traditional market leadership may take hold and make some of us older guys look a little better than the-you know, high tech performers. |
I think long term, even though we're down today, you're seeing some energy and drug stocks responding in a way that suggests the market believes he is going to cut rates again this year. |
I think that we're entering into a season of commonality. Earlier this year we had such a euphoric spike in different sectors at different times, and it was very tough to get a fix on valuation and fundamentals. |
I think the market today is just perpetuating the uncertainty we've seen in the last few weeks after it hit its highs earlier in the month. |
I think we're going to see a successful third quarter, but it's going to be determined by the quality of the earnings. |
It's the micro management, the machinations up and down of interest rates, that has really gotten us to the point where we are now, rather than the market playing out at its own natural cycle. So the Fed today, I believe, will take a look back at the landscape, assess what they've done, and probably use August to evaluate whether or not to come back in and raise rates. |
Lately, the market has been spiking violently up and violently down. And though we'd prefer it were different, this type of violent movement is appropriate right now. The market has come a long way. |
Right now the market is not reacting to fundamentals but is driven by the psychological. That's certainly the reaction you're seeing after the Fed news. |
The market has been in a lateral consolidation for the last six to eight weeks, and we're seeing a continuation of that. Having broken through some technical resistance levels, it is appropriate that there has been some profit-taking. But the general trend of the market remains positive longer-term. |
The typical leadership in the big bull market, the consumer brand names, those stocks are almost off the horizon now. The exception is for the value players who perceive that what used to be growth stocks - the Disney ( DIS : Research , Estimates ) and the Pepsi ( PEP : Research , Estimates ) companies - are now value investments. |
This is an 18-year bull market that is expiring. The bull isn't but the phasing is. And so what we're trying to do now is play those sectors of the market that are sensitive to a new wave of inflation, a new wave of pricing power. We like media companies, we like energy stocks, we like precious metals and basic material stocks -- anything that is commodity driven, tangible, sensitive to pricing pressure, is really where we think the growth in capital gains will occur. |
This lateral consolidation could persist through May. But that's not a negative. The longer the market can sustain this lateral consolidation, the more of a base it can create to expand. |
Until we get some sort of clear-cut message about where we're going in terms of the conflict with Iraq, the economic slowdown and corporate profits, fiscal policy, and everything else, we're going to keep seeing this kind of action. |