Rev Shark: "Morning Outlook"
Enviado: 19/9/2003 14:14Rev Shark
"Morning Outlook"
9/19/03 08:16 AM ET
"We must believe in luck. For how else can we explain the success of those we don't like?"
-- Jean Cocteau
"One of the paradoxes of a strong market is that they tend to leave many people unhappy. On the surface you would tend to think stocks are going up and people are making money, so most everyone should be pleased.
The reality is that an awful lot of people aren't participating in the upside. There are the skeptics who have had their views continually reinforced in a three-year-long bear market. They are convinced that it's just a matter of time before this market comes to its senses and continues its downward descent.
But the biggest contingent of unhappy folks are probably the quasi-bulls. These are folks who aren't downright bearish but have been overly cautious and underinvested throughout this rally. They may have some profits but have been way too cautious and are badly lagging the indices. They keep hoping for the market to correct so they can put money to work at lower prices and catch up a bit.
One great example of the extensive unhappiness about this market are hedge funds. The Wall Street Journal reported this morning that the average hedge fund is up just 9% this year vs. a 43% increase for the Nasdaq. A 10% gain last year would have felt pretty good but this year it feels like an abysmal failure.
So despite the big technical breakout to new highs yesterday there are a lot of folks who are unhappy and rooting for this market to take a big hit. The fact that there are so many grumbling about this market is exactly why it has been so sticky to the upside. Hedge funds and individuals that are lagging so badly are desperate to find a way to catch up.
Bob Marcin wrote a tongue-in-check item the other day about how he was going to start chasing expensive stocks and ignore his fundamental convictions. Bob was just joking but there are a lot of folks who are doing exactly that. They need performance points and are willing to roll the dice to get it. They are willing to chase a market they really don't believe in because the alternative of underperformance is so painful.
Regardless of your view of the market it is difficult to find fault with the technical breakout to new highs yesterday. There was good volume, decent breadth and a clear break. Sounds great but one thing I did find a bit troublesome was that small-cap stocks were the laggard yesterday. Bigger-cap stocks were the primary focus of buyers, which may be a symptom of big investors trying to chase performance. The folks who are too big for small-caps have to buy the Yahoo's and Symantec's to play catch-up. I'll be watching relative performance of big- and small-caps today to see if this tendency is expanding.
We have another flat open shaping up. That has been a good sign for this market recently. The bulls have been quite successful in shaking off early morning skittishness and ramping the market up through the day. We have some downgrades on the wires, most notable Amgen (AMGN:Nasdaq) but the economic calendar is quiet. Overseas markets are mostly negative and bonds are firm.
Do we follow through once again on yesterday's breakout or will the bears finally get their long-wished-for bear trap? There are an awful lot of folks rooting for some downside, which is a positive for the bulls. "
(in www.realmoney.com)
"Morning Outlook"
9/19/03 08:16 AM ET
"We must believe in luck. For how else can we explain the success of those we don't like?"
-- Jean Cocteau
"One of the paradoxes of a strong market is that they tend to leave many people unhappy. On the surface you would tend to think stocks are going up and people are making money, so most everyone should be pleased.
The reality is that an awful lot of people aren't participating in the upside. There are the skeptics who have had their views continually reinforced in a three-year-long bear market. They are convinced that it's just a matter of time before this market comes to its senses and continues its downward descent.
But the biggest contingent of unhappy folks are probably the quasi-bulls. These are folks who aren't downright bearish but have been overly cautious and underinvested throughout this rally. They may have some profits but have been way too cautious and are badly lagging the indices. They keep hoping for the market to correct so they can put money to work at lower prices and catch up a bit.
One great example of the extensive unhappiness about this market are hedge funds. The Wall Street Journal reported this morning that the average hedge fund is up just 9% this year vs. a 43% increase for the Nasdaq. A 10% gain last year would have felt pretty good but this year it feels like an abysmal failure.
So despite the big technical breakout to new highs yesterday there are a lot of folks who are unhappy and rooting for this market to take a big hit. The fact that there are so many grumbling about this market is exactly why it has been so sticky to the upside. Hedge funds and individuals that are lagging so badly are desperate to find a way to catch up.
Bob Marcin wrote a tongue-in-check item the other day about how he was going to start chasing expensive stocks and ignore his fundamental convictions. Bob was just joking but there are a lot of folks who are doing exactly that. They need performance points and are willing to roll the dice to get it. They are willing to chase a market they really don't believe in because the alternative of underperformance is so painful.
Regardless of your view of the market it is difficult to find fault with the technical breakout to new highs yesterday. There was good volume, decent breadth and a clear break. Sounds great but one thing I did find a bit troublesome was that small-cap stocks were the laggard yesterday. Bigger-cap stocks were the primary focus of buyers, which may be a symptom of big investors trying to chase performance. The folks who are too big for small-caps have to buy the Yahoo's and Symantec's to play catch-up. I'll be watching relative performance of big- and small-caps today to see if this tendency is expanding.
We have another flat open shaping up. That has been a good sign for this market recently. The bulls have been quite successful in shaking off early morning skittishness and ramping the market up through the day. We have some downgrades on the wires, most notable Amgen (AMGN:Nasdaq) but the economic calendar is quiet. Overseas markets are mostly negative and bonds are firm.
Do we follow through once again on yesterday's breakout or will the bears finally get their long-wished-for bear trap? There are an awful lot of folks rooting for some downside, which is a positive for the bulls. "
(in www.realmoney.com)