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Since 95% of the recent posts have concerned technical issues and opinions
based on these factors, I wanted to touch on a few fundamental issues as well.
I believe that after the run up we have had, that it is certainly possible
we may have a correction to the down side. I also think that we are
running out of news to move us further to the up side. A 50 point lowering
of the rates is probably built in so that will be a non event, (if it
happens). Current and near term earnings will continue to be adversely
impacted. Technicians are united in calling for a draw down. Many tech
stocks have been run up beyond any reasonable PE based on historical terms.
Now, on the other hand ... I have never been willing to short a dull market
and it has certainly been that for some time now. Earnings news can
continue to be bad but is unlikely to be much worse which leaves us looking
ahead to improvement. Companies are hitting revised estimates and beating
them with regularity now. There is still a ton of money on the
sidelines. Fear of missing the run up is about as great as fear of
participating.
Based on all the above and my experience, I am in the camp of about a 10%
correction and then a sloppy, struggling, climb up the wall of worry. Due
to the issues above, I am not even convinced about the 10% drop first ...
it wouldn't take much positive news to bring the money in. Flexibility is
key at this juncture I believe and I wish all well with whatever transpires.
Bob
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