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1. March 14, 2003 -- Dow Sub 8000
2/13/2009 11:32 AM EST
If we get a sub-8000 close on the
today, it will be the first time we close out a week in that territory since March 14, 2003. This nugget was just pointed out to me by a "quiet giant" in the technical research world. If the global economy is truly going to "hell in a handbasket" and we are only at a roughly a six-year low, there are two ways of looking at it.
Basically two choices: 1.) Is it possible that there is a degree of dramatization accompanying this selloff that we have witnessed over the past 18 months? Is it possible that this six-year low in the Dow is being blown out of proportion? 2.) If things are as bad as it sounds in the media (of all kinds), should we be expecting a "Depression-era" type of bunker mentality on the part of the average citizen? Is unemployment roughly 7.6 % the beginning or the end?
I suspect things in the macro view will get substantially worse. Unemployment, for example, could climb by at least another 50% from here (11%-13%), and the stimulus bill will aggravate an already staggering national debt. The litany of issues and challenges ahead are countless. This six-year low in the Dow is only a first step. Much like Doug and Robert, I take what is given and don't insist on making trades into investments.
2. On Schwab and Semis
2/13/2009 11:39 AM EST
A couple analysts out already on
asset-gathering prowess, as it took in $12 billion in new assets in January 2009, with its monthly activity report released this morning. Although, admittedly, it is tough to be a long-term investor in this market as we are, readers were given an early clue to the potential for Schwab and the other discount brokers gaining share vis-a-vis the traditional banks and asset managers in this
from late 2007. We've posted on Schwab many times since, and we believe that the "discount broker" model (although that moniker is losing its significance as greater emphasis is placed on asset gathering) will be the asset-gathering model of the future, and is only enhanced with the Madoff scandal (i.e., having a custodian separate from the manager will allow retail investors to sleep at night, once they understand the significance).
is up again in a very tough tape. Likely one of the worst-performing sectors of the decade,
both remain above their 50-day moving averages. I think the semis and these two names are an important tell for this market. The semis are the equivalent of the steel stocks in the 1990's -- no one wants to admit owning them -- and I have "The Texan" valued at 6 times four-quarter trailing CFO and 10 times free cash flow.
3. Abercrombie Surges
2/13/2009 10:57 AM EST
Abercrombie & Fitch
is up over 10% despite a 68% plunge in fourth-quarter profits. On the bright side, the company did beat EPS estimates by 10 cents while revenue fell less than expected.
The breakout today indicates that investors are pleased with Abercrombie's cost-cutting efforts and are taking advantage of the stock's attractive value. Volume is running extremely heavy and is already above the daily average for the stock. This follows a huge gap-higher open that pushed the stock to new monthly highs and above heavy trend line resistance.
There is some short-term resistance between $23.50 and $24.00, but I expect Abercrombie & Fitch to power through this area as long as volume remains strong. Once above the January high of $25.00, the stock will have left behind a solid 12-week base that has been under construction since late November. Today's jump has put the stock in a very strong position, and I expect it to work higher over the next few weeks.
4. Couple of things/ Geron/GS/PEP
2/13/2009 10:06 AM EST
First, congratz to Adam for another big hit: his short of
. That newsletter is perfect for hedge funds. Second,
was extraordinarily great with excellent growth. I just bought some. It was better than
, and lots of people are short it. Third, it is getting through peoples' heads that they can do a deal to pay back its TARP very soon
if it wants to
. That will make it so it can pretty much become whatever it wants. I wish it would learn how to do retail banking. It could own the banking world. But it doesn't want that kind of exposure. Can't blame them...
5. Watch the S&P Futures Trendline
2/13/2009 6:43 AM EST
Yesterday, March S&P futures again managed to close above the important trendline drawn from the Nov. 21 low to the Jan. 20 low. With yesterday being an up close relative to Wednesday's, a close today beneath the line's value (826) increases the odds that it would
be a false breakdown. Would be tough to go home long over this three-day weekend if futures are beneath that level come 4:10 p.m.
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This article was written by a staff member of RealMoney.com.