Tuesday, March 6, 2007

Morning Market Comment

It looks like we're finally getting an oversold bounce with S&P futures flying higher by more than 1%. As I mentioned last night, there are many fundamentals that make the factors behind the recent slide in the market quite dissimilar to the May, 2006 drop; but from a technical standpoint, last May is useful to examine since it's the last period of a large downward move in the stock market and a big upward spike in the volatility indexes (VIX and VXO).

One lesson that I walk away from in looking at this Spring/Summer 2006 chart of the S&P is that the index slumped in May, sharply recovered, then slumped again to lower lows, sharply rebounded, then retested the lows in July.

I don't mean to be a wet blanket, but there are no magic bullets to automatically reverse what happened last week so it will be interesting to see the staying power of this rebound (hours? days? several days?) and when yesterday's lows are re tested. I think a restest and below is likely to the area of 200 day average as previous stated on the blog. Futures trading since early this morning on the S&P has been my preferred vehicle of catching some profit on upward moves, though 1390 has already been a brick wall.
Here's a chart of the present day S&P - amazing that the even the 5 day moving average presents a challenge at 1397, and then there's the 10 day all the way up at 1424 area to turn things back to "bullish".

Google (GOOG) is rebounding by $5. What a bunch of doofuses at Microsoft (MSFT). No doubt you've heard the story about how MSFT is going after GOOG over its copyright policy. Psst, Microsoft, Google was smart enough to avoid getting into content generation. Can you say Jack Welch, Bill Gates and what was it? PMS-NBC?
If only we really knew what Alan Greenspan was REALLY thinking (about the economy). He's been a bit more vocal of late in the nature of "hey, remember me?" It's prudent for him to come out of the woodwork ahead of the publication of his book. Now he's said to see a 1 in 3 chance of recession.
Not every Wall Street firm is downgrading the other. This morning Wachovia reiterated an Overweight on Bear Stearns (BSC) and Goldman Sachs (GS) saying both will post solid earnings and the GS will post highest return on equity.
HSBC admits it will take years for it to sort through its U.S. subprime problems. Seriously, from a psychological impact within the annals of British banking, the impact that U.S. subprime is having on HSBC is likely about as bad as the Boston Tea Party had on British financial interests a few hundred years before.
Better late than never... Roth Capital downgraded Accreditedf Home (LEND) to Hold from Buy. ROTH maintains a $16 target on LEND.

2 comments:

neilfe said...

GREAT SITE, cant believe one person can get such good info

I was a bit surprised by the upgrade of MacGuire as well until I realized that MDG was the stock that was upgraded and not MPG, which UBS doesnt even cover....I kept shorting MPG into the rally today, as NEW acounts for 9% of est 2007 revenues, and its main markets (Orange County) are a bit weak

neilfe said...

Jim

Is there a direct email I can reach you at..Mine is neil@nebomanagement.com

Thanks

Neil