Richard Suttmeier
Richard Suttmeier
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If you are a short-term trader you like to see some more gyrations. But certainly from a longer term perspective you want to see the market broaden out, have a very nice looking pattern to it technically so that you are not getting hurt too much in a market that's going to grind higher. It looks like that will continue. My theme is productivity. The Federal Reserve stated that that is a very important point in moving the economy forward. The Fed will allow a stronger growth rate as long as productivity gains remain strong. And I think that's going to be the case.
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I am optimistic about most of the stocks in the market because I think it's only the Dow and the transports that have a negative profile right now. We've evaluated and came up with 10 sectors that we thought were positioned the best in the year 2000, and moving forward in terms of providing leadership in the economy. And then in that
above buying correction economy failed investors last momentum moving negative selling since stocks strength tale traded weakness week whereas year
All year long, it's been a tale of two markets. The momentum on the Dow is declining, and the Dow last week failed at its 200-day moving average, which is declining, two things that are negative for the Dow and for 'old economy' stocks. Whereas on the Nasdaq, since the big correction that we had, the Nasdaq momentum is now rising, and it traded back above its 200-day moving average, which is still rising. Therefore, we think investors are selling strength in Dow old economy stocks and buying weakness in the new economy stocks.
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Bill Gross may have the most fixed-income assets on the planet but his ability to forecast what the Fed may or may not do is not very good,
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We've left ourselves without support as we're breaking to new lows for the year,
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If we fall below 7,700, we're looking at a potential fall to 7,200, where it was in October. That's a 500 point range, but it's one we could stay in for a while.
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When we've had company-specific disappointments like this over the past two years, we've seen buyers come in after the midday to snap up bargains. If that doesn't happen, it could be very bad. We could see the Dow at 10,500, which would be a blow less than a week after everyone was talking about tripping over 11,000.
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It's a question of how long you've owned it. If you've owned it from 1997 levels, maybe you own from $30 a share post splits. And if that's the case, you want to take a look at how much money did I have invested in Microsoft two, three, or four years ago, how much money do I have invested in Microsoft now, and maybe pare it back a little due to the uncertainty.
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What I don't want to see is the Dow fall below that October low, because then you're in danger of seeing a Dow 5,000 scenario.
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You have so many unknowns. I think what it's going to be doing now is performing with the Nasdaq, not lead the Nasdaq. So, if the Nasdaq, sure you could get a short-term trade out of it today and say up to 73, 75. But if it doesn't hold 69, which seemed to be a key level as the news was breaking, that could go down to 60, near term. That's where I would put some longer-term money in.
bigger correction longer
There's complacency in the market. In my experience, the correction (tends to be) a bigger one the longer you go without one.
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As we get closer to the quarter-end, if the Federal Reserve does not raise rates, and even indicates a neutral bias after that, you will have a quarter-ending window-dressing rally like you've never seen before,
stage
I think we've set the stage for a year-end rally.
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I think there's still a lot of investors -- particularly the shorter-term investors -- who are looking to sell strength. They're trying to shore up their accounts by selling strength in this market. They've just had a lot of problems and they were obviously some hurting portfolios, if you will, based upon the declines that we saw for March and for May.