Sunday, November 14, 2004

What now?

The recent run up in stocks driven by lower oil prices, big money inflow into mutual funds, possibility of Social Security reform and certainty about the Presidency has me thinking "What now?" I am not the one to fight the trend but I do like to think about what could go wrong in this bullish run up: the biggest worry remains the pace of the economic growth. With rising interest rates, commodities index being at a 20yr high, lower dollar value, and no real trend of improving employment picture it's really tough for me to be overly bullish.

However, I do think that there is improving trends at the margin especially after listening to DELL and CDWC last week. But there was plenty of not so rosy commentary from CSCO and A. Also, I believe that the SOX index which usually is a good leading indicator has not been very convincing except for AMD (I believe INTC is strong due to the large weighting in Nasdaq). We get a good mix of earnings this week and guaging what companies like WMT, HD, HPQ, NTAP, AMAT, INTU, ADSK, MRVL, MCDTA have to say will be important in determining how we position ourselves into the final month of the Year, which usually is seasonally strong. Unless the commentary this week is pessimistic (which I doubt), I believe the markets will continue the uptrend with the usual healthy small retracements.

I apologize for not being able to post for past few days.


Post a Comment

<< Home