Market Talk / Oct. 29 - Nov. 4

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08:33 am : S&P futures vs fair value: -1.0. Nasdaq futures vs fair value: -1.0. Futures indications weaken in response to this morning's economic data, now suggesting a slightly lower start for stocks. A preliminary read on Q3 productivity just came in unchanged (consensus 1.1%), as unit labor costs rose 3.8% (consensus 3.5%) following an upwardly revised 5.4% gain in Q2, potentially signaling some wage-inflation worries. Initial claims rose 18K to 327K (consensus 310K); however, the claims data have not had as much of an impact on trading as the productivity data since investors will now turn their focus to tomorrow's more influential employment report.
 
The market was nervous yesterday because the Institute for Supply Management said its index of U.S. manufacturing activity for October fell 1.7 points to 51.2, the lowest level in more than three years and well below analysts' expectations for an October reading of 53.5. Bond prices rose and the 10-year Treasury yield fell to its lowest level in a month, as traders interpreted the data as a signal inflation remains in check in the U.S. economy. At the same time, the drop wasn't enough to rekindle investors' fading hopes that the Federal Reserve will cut its key interest-rate target this year to spur economic growth.

Any ISM reading above 50 signals growth, which means that even if the numbers released yesterday were below expectations, they still mean factory activity is rising. By contrast, when the Fed started its last cycle of rate cuts in 2001, the ISM index was below 44. The economy is still fairly solid and this type of report is something the Fed might welcome. Time to relax.
 
nnuut said:
Maybe you should read this first, I just did.:o
3 signs that a stock crash is coming

Three major indicators with strong track records are signaling it's time to sell stocks. Here's how they work and why investors should worry.

By Michael Brush
What a great time to own stocks.
The Dow Jones Industrial Average ($INDU) is setting records just about every day. The S&P 500 Index ($INX) has advanced 12% in less than five months. Technology stocks are up about 14% since midsummer.
The giddy stock bulls may be in for a nasty surprise. They're ignoring three trusty stock-market indicators -- with great records for predicting corrections -- that currently are saying it's time to get out of equities. The signals are closely watched by market technicians on the lookout for hints that the bull run is getting tired.
One of the indicators says stocks are simply expensive compared with other investment options available to big money managers. Another says that mutual fund managers have mostly exhausted the supply of dollars they have available to put into the market. And the third says that the smartest investors are now betting on a downturn. Together, these harbingers paint a far different picture of the market than do the raw return numbers.
Here's a closer look at these indicators and why you should be cautious with stocks now. (continued)
http://articles.moneycentral.msn.com/Investing/CompanyFocus/3SignsThatAStockCrashIsComing.aspx
Click to expand...

Tom,

Did you read this article? He seems to be saying that the valuation leg that you often talk about/use is not as strong as you are purporting. And what's strange is he seems to be citing the same source as you. Any thoughts?
 
James48843 said:
Freefall down.
Click to expand...


The late comers could hold it up for now, but the jobs number better be Market Friendly! This rally is long in the tooth and is do a rest. However, it's up till its not and some think the top is in for this leg of the rally. I can't believe the market is down the last two days. Two of the best days of the year to be long and the Market so far is down. I think the Dippers could take it up one more time. Now, how much higher can we go this leg. Caution here! Buy the dips or sell the rallies? Stay tuned for the answer.
 
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My good man get real and relax. This correction is prunning by the hedge funds and the bears are still stepping up to go short. Remember where we are at 12,000. A little pause to refresh is natural. Markets typically rally, then again correct by one-quarter to one-third before re-rallying. You have to be in to win. And besides the equity market is always, by default, in a bear market.

Dennis
 
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robo said:
The late comers could hold it up for now, but the jobs number better be Market Friendly! This rally is long in the tooth and is do a rest. However, it's up till its not and some think the top is in for this leg of the rally. I can't believe the market is down the last two days. Two of the best days of the year to be long and the Market so far is down. I think the Dippers could take it up one more time. Now, how much higher can we go this leg. Caution here! Buy the dips or sell the rallies? Stay tuned for the answer.
Click to expand...

Question Robo. If the jobs number is bad, then the dollar should tank. Correct? If this is correct then tomorrow we should be in the I fund. If the jobs number is good, then we should stay in the C/S fund.

What do you think?
 
ATCJeff,

Actually a weak dollar is positive for the C and S fund because of the export related businesses. The SPX generates up to 40% of revenues from exports. Accelerating exports allow the nation's businesses to keep expanding despite a projected slowdown in economic growth at home. One major reason I'm 100% C fund. A weaker dollar gives U.S. producers a competitive edge in pricing. It takes time for changes in exchange rates to produce shifts in trade flows - but it's working.
 
Birchtree said:
ATCJeff,

Actually a weak dollar is positive for the C and S fund because of the export related businesses. The SPX generates up to 40% of revenues from exports. Accelerating exports allow the nation's businesses to keep expanding despite a projected slowdown in economic growth at home. One major reason I'm 100% C fund. A weaker dollar gives U.S. producers a competitive edge in pricing. It takes time for changes in exchange rates to produce shifts in trade flows - but it's working.
Click to expand...

Agree, though I was thinking more short term.

Thanks Dennis
 
Thinking short term in a bull market can be expensive. This bull will try adamantly to kick you off. If you have doubts you will lose your grip like some others this morning. The name of this game is to make you lose your confidence and prevent you from recognizing the prevailing trend. At times like this don't listen to your stomach.
 
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