|
Wednesday September 08, 2010 |
Cycle Watch Recent
Sample Issue
| Bedford and Associates
Research Group |
October 08, 2001 |
 |
|
CYCLE
WATCH |
|
I
N S T I T U T I O N A L A D V I S O R |
|
Sector Analysis
|
|
|
|
|
|
Buy
|
Hold
|
Reduce
|
Sell
|
|
|
|
Retail
|
Insurance
|
Financial
Serv.
|
Banking
|
|
|
|
Communication
|
Software
|
Healthcare
|
Utilities
|
|
|
|
Comp
Hardware
|
Manufacturing
|
Durables
|
Leisure
|
|
|
|
Info.
Services
|
Chemicals
|
Semiconductors
|
Media
& Enter.
|
|
|
|
Mining
|
Primary
Prod.
|
|
Non
Durables
|
|
|
|
|
Upstream
Oil
|
|
Building
|
|
|
|
|
Downstream
Oil
|
|
Services
|
|
|
|
|
|
|
Transportation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Past Holds the Key to the
Future
One thing is certain;
nothing makes investors feel better about the stock market than a
solid rally. Investors
got that and more last week as all of the major averages added to
the spectacular gains of the previous week.
The million dollar question is, is this the start of
something big or just another in what has become a long line of
bear market rallies? For
many bulls this is a non-starter.
They will argue that the market had become extremely
oversold and sentiment overwhelmingly bearish.
They might also argue that stocks are finally beginning to
rally on bad news, a sure sign at least some investors are betting
that prices will not get much cheaper.
The problem with all of the bulls' arguments is that they
can be easily refuted by bears.
Stocks are not cheap by historical standards and although
sentiment had become extremely bearish, the level of uncertainty
was unprecedented. Investors
feel good about the markets right now because prices are rising…
but what happens when prices begin to fall?
One of the things we
have been watching very carefully since the September 11 terrorist
attacks is investor psychology.
In the days immediately following the World Trade Center
tragedy many professional traders began looking backward for
comparison. Most
gravitated toward the JFK assassination of 1963 and the Gulf War
of 1991. What they found were stock markets where the lows were made
early and very strong rallies through the next several months.
Although it is always silly to suggest direct comparison
between current political events and those of the past, it is
important to note that very often investors respond in similar
fashion. A
great deal of big money is now betting that the stock market has
made its low and the next several months will bring a huge rally
as investors are citizens look forward to a time when politics
will move to the background.
Psychology is suggesting that a very real bottom is taking
shape.
It is still a touch
early for much movement in our technical work but money flows have
been much better in most of technology and it is clear, this is
where the bulk of new investment dollars are flowing.
This week communication, computer hardware and information
services have moved to our buy category.
It is early in the new cycle but there is enough evidence
to suggest these groups will work higher.
Also attractive are retail and one lone defensive sector,
mining.
One of the most
interesting developments is the continued weakness for most of the
defensive sectors. Money
is flowing out of non-durables, utilities and even banking.
Although we are slightly troubled by the weakness for
banking groups because these stocks traditionally lead rallies,
the weakness for non-durables and utilities suggests that
professionals are finally beginning to redeploy capital toward
less risk averse investments.
Transportation, building, services and leisure are actually
the weakest sectors at this time.
Their weakness tells us many professionals are betting the
first leg higher will be driven by liquidity, not fundamentals.
Last
week we wrote about SPX 1,066 and NASDAQ 1,620.
Both levels were eclipsed during the week.
This is the bulls' market to take.
The next resistance levels are 1,080 and 1,699.
|
| Bedford and
Associates Research Group |
Page 1 |
|
more
 |
|
Home >
Advisory Services > Cycle Watch > Recent
Sample
