Quick Takes on Market Matters
This column was originally published on RealMoney on Oct. 5 at 12:02 p.m. EDT. It's being republished as a bonus for TheStreet.com readers.
We Americans love our information delivered in concise sound bites, unadorned by too many caveats or details.
That suits me just fine today, because I've got a truckload of observations that need to be stuffed into about 800 words of RealMoney text.
So without further delay, here are my quick takes on everything market-related as we head into third-quarter reporting season, tax-selling season and a new postseason for the New York Yankees to kick some serious butt.
The Dow at New Highs!Who gives a hoot? Most traders don't follow the index anymore unless they're trading Dow futures contracts. The component stocks don't matter to the "real" markets anymore. They're just convenient vehicles to make the public feel good about a slowing economy four weeks ahead of a key election.
Oil and Gas StocksYou have to respect the wave of sector downgrades coming from the major houses this week. They suggest the underlying crude oil contract will be testing $55 in the weeks ahead. Like the Dow, isn't it amazing we're seeing a deep slide in gasoline just weeks before Americans head to the polls?
Thoughts on MicrosoftThis is the best opportunity in years for Microsoft's (MSFT) stock to show genuine leadership and break out of its long malaise. Unfortunately, no one cares about the Vista operating system besides the Wall Street hype machine. Computer users have been down this road before, and we won't upgrade until we're absolutely forced to do it.
The Prettiest Chart in the Stock UniverseBelow is the most bullish chart I can find in my database of more than 700 stocks. Philadelphia Consolidated Holdings (PHLY) is a regional insurance carrier that has been moving higher for six years, with very few detours. What's not to love about this ferocious uptrend?
Program TradingLook no further for the reason why the markets are tough to trade in 2006. Contrary to popular opinion, most of these computer-generated nightmares are directionless in nature. Instead of piling on to trends, the algorithms execute volatility and mean distribution formulae that retail traders can't understand, unless they've taken several years of theoretical mathematics.
Why TA Doesn't WorkLook at this mind-blowing chart of Armor Holdings (AH) after it warned about third-quarter earnings on Wednesday morning. There were no bearish divergences ahead of the news, and Tuesday's massive rally showed intense bull strength after a legitimate breakout. But the stock got crushed anyway. Ouch!
My Favorite Trading BlogThe Kirk Report wins this one, hands down. Concise, well-written and always entertaining, the blog is a must-read for traders needing fast analysis from a broad variety of online sources. Plus, Charles Kirk's trading diary shows a mind-boggling application of market discipline.
Big-CapsTechnicians are taught that big-cap rallies signal "last-gasp" moves in aging bull markets. The theory is that big money tosses capital into these old behemoths in a flight to safety that precedes major downturns. Will it be any different this time around? Sure it will, and Santa Claus is a real person living way up in the Arctic Circle.
CommoditiesGold is $300 higher now than it was a few years ago. I believe commodities are in a long-term bull market and just correcting the steep curve of the last rally leg. Look for a new leg to develop next year, and give sleepless nights to analysts worried about a rising inflationary spiral.
Amaranth AdvisorsThe collapse of this mammoth hedge fund couldn't happen to nicer folks. It breaks my heart. Really, I'm not kidding.
General MotorsGM (GM) is making all the right moves and recovering from a long decline. But the rear engine seal on my son's two-year old Cavalier just broke, and the darn machine has to spend three days in the shop. Like millions of other folks with similar experiences, I'll never buy another car from this troubled company.
Technology StocksThey're still overloved and taking up too much space in the financial media, stock blogs and investment portfolios. Despite the obvious, legions of public investors still believe these overpriced darlings will return to their bubble glory someday soon. In the meantime, they're missing out on real bull markets in a dozen other places.
Stocks vs. Real EstateAverage investors would much rather see their home prices and other real estate holdings go up in the next 12 months than their retirement funds. Anyone disagree?
CNBC-TVIt's an entertainment channel first and an information channel second. That's never been a secret, so why do they take so much flak from other financial media? In the first 40 years of my life, I thought the markets were the dullest place on earth. It took this network's smiling faces to get me interested in the trading game.
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