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Three Themes to Help Track Market Sentiment |
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| Jul 09, 2008 12:42 PM UTC |
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Tracked Blogger
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7/7 - "Lately, much of the odds have boiled down to whether the market is trading in what I call "recession mode" or "recovery mode". In recession mode, there is risk-aversion among stocks; in recovery mode we see bargain hunting among the hardest hit sectors. The three themes I've found most helpful in tracking these modes are: Performance of the Financial Sector Relative to the Broad Market...Performance of the Housing Sector Relative to the Broad Market... Performance of Consumer Staples Sector Relative to the Consumer Discretionary Sector." "Today all three themes kicked into their risk-averse, recessionary modes. That was a great tell for the day's direction. I suspect these themes will also help us identify any eventual turnaround in this weak market. As long as traders and investors anticipate further bad news and losses from banking and housing, however, they will stay defensive--and that poses pressures for the rest of the stock market." 
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5 Rewarding Sectors in a Shrinking Economy
7/8 - "Given this nature of the economy, the questions that comes to our minds more often than not are—should I dig in my heels and grind it out or should I convert my stocks into cash or gold ? (I like gold—it’s not my favorite color but it’s a great hedge and adds a nice balance to my portfolio and if you follow my blog, you’ll understand why)
In any case, here are 5 stock sectors (with a ...
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Price Momentum: A Helpful Tool in Gauging Market Trends
7/3 - "Price momentum is a well known "market anomaly", defying efficient market theorists. In general, the effect is stocks that have been outperforming in the past tend to continue to do so, and vice versa. Whether there is some information leakage that allows the better informed to bid up stocks over time, or just a variant on the "greater fool theory", buy high in hopes to sell higher, pric...
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N/A risk: moderate |
Five Phases to the Current Down Cycle
7/8 - "Interesting analysis via David Rosenberg of Merrill Lynch:"
'There have been five phases to this current down-cycle – the first four are still in full swing, but it is the fifth that will very likely emerge as the most difficult stage of this economic downturn and bear market:
The first wave was the end of the housing cycle when starts peaked and began to roll over...The second wav...
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N/A risk: moderate |
Lack of Panic in Market Suggests Bottom Isn't Here Yet
7/8 - "We are doing all the things necessary to form a bottom - the natural gas stocks are finally being hit, fertilizer is now joining coal in the outhouse, and we are getting some minor rotation into financials. All things we've been looking for to form a bottom.
On the negative side - this move into technology as 'safe haven' is, aside from idiotic, stalling the process - now people are u...
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