Weekly Thoughts: {MACRO VIEW}
Intriguing times approaching in the marketplace and worth taking closer notes. This week: Econ data approaches as earnings season nearing its end. I am looking at the US10 year yield closely along with investor’s complacency. Plenty of questions on the table:
Is the sentiment too bullish or bearish for equities?
Is there too much liquidity in the market place?
Finally, what is the contrarian, consensus and least liked view in the marketplace in regards to currency, commodity and stocks?
These questions are being asked on the macro level following the start of the year. But the answer lingers post expected and of course least expected events.
SPX: Momentum appears extended from a technical standpoint. Given the strong run up since the summer of 2006 where the market returned as high as 17%. During that rally, 10 year declined from 5.25% highs, down to 4.40% by December 1st. The month of December began to show signs of 10 year yield recovery and market stabilization which can be viewed as consolidation. At the same 6 month period, Crude plunged significantly into the New Year. Crude is attempting to stable around $50 while yields are trying to recover. Rise in both oil and rates can contribute to a slowdown in the equity markets. Perhaps, a pause or slight correction is on the board. Also, VIX – volatility index also dropped further. It continues to signal market complacency.
Overall Point: Not a timely entry point for most groups in the
Investment Approach:
Investing offers plenty of literature, wisdom and excitement. It actually drives me to learn more and investigate on investments that are appealing. Most importantly talk is cheap forcing one to back up his/her best idea through capital distribution. I find myself running around, investigating for stock specific calls. Although stock picking contributes towards portfolio growth, It’s the construction of the custom index that’s truly measures wealth.. Focusing on the growth of the overall portfolio is what counts. In answering these questions, I revisit previous ideas and look into timely entry points in select area.
Sector and Stock Ideas:
At this stage, continuing to look into technology, media and telecommunication as a growth area in the broader market. NT: Nortel an interesting long-term chart. Looking for turn in fundamentals and part of the communication, Telco and media theme.
Also revisiting DuPont an idea mentioned before on this blog. Worth revisiting especially as a theme for the next 2-4 years. Monthly chart suggests a cycle shift into chemical companies pending and a good investment.
http://moneytakers.blogspot.com/2006/10/dd-attractive-basing-pattern.html
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