João Dolores: Ação da Sonae “tem um desconto à volta de 50%”

[Ulisses Pereira]

Rev Shark
"Keep an Eye on These Levels in the S&P"
12/01/03 07:56 AM ET

"Focus on the journey, not the destination. Joy is found not in finishing an activity but in doing it."

-- Greg Anderson

"As we kick off the final month of the year, the primary focus of investors is whether we will conclude the first positive year since 1999 with a bang or a whimper. With the indices already posting stellar gains, is it possible for things to move even higher before the end of the year?

The bears will continue to make the same arguments they have been making for some time now: Valuations are unrealistic, the economic recovery is fully priced in and the exuberance of investors is simply an echo of the bubble four years ago and will pop in much the same way. Recently the bears have added commentary on the mutual fund scandals, the weak dollar and the possibility of the flight of foreign investors to their litany of reasons to expect trouble ahead.

As always, the bearish arguments make great sense and it is very difficult to find fault with their thinking. However, the major flaw in the bears' arguments is the assumption that the market is logical and will listen to these compelling arguments. The only certain thing about the stock market is that it is emotional and irrational. The most compelling arguments in the world have little effect on a mob of investors when they are smelling profits or fearing doom.

If we are going to time this market successfully in December we will have to focus primarily on the emotional state of investors, not objective calculations of value. Are investors going to be defensive and try to protect the outsized gains they have built up this year, or are they going to be greedy and chase this market up while they hunt for further profits? That is the question with which we need to concern ourselves.

The bears will tell you that the pace of the market has slowed recently, which is a sign that momentum is cooling and investors are becoming more cautious. The bulls will counter that the fact the market has done little for about six weeks is simply healthy basing action that will help support a further leg up to conclude the year.

One positive for the bulls is that there does seem to be an increase in the amount of talk about how extended the market is and how we should be more cautious. We need worry and skepticism if the market is going to climb higher. On the other hand, there is plenty of talk about the potential of a Santa Claus rally. If too many folks are expecting the delivery of a major gift, they are likely to be disappointed.

Technically the indices are still in fine shape. We are within shouting distance of annual highs and we have regained trendline support after nearly breaking down a couple of weeks ago. The S&P 500 looks ready to breach key resistance at 1060 at the open today but it's the close that really counts: 1060 will be a closing high and 1063 a new high. Those are the numbers that are on the radar screen this morning.

We have a solid start shaping up this morning. Overseas markets are pretty much up across the board with Japan and Germany leading the way. The dollar is mixed, gold is flirting with the $400 level again and oil is down. On the economic calendar we have auto sales, construction spending and the November ISM number.

Will the Monday morning optimism be sustained? We will find out soon enough. "

(in www.realmoney.com)