market

They say that the market always does what will frustrate the most people. I would say that over the last few weeks the persistent upward bias has probably frustrated most everyone -- very few people have had the guts to be aggressively long since March 17th knowing that the market was going up more than others expected.

I think quite a few have been cautiously bullish figuring the next correction was always right around the corner. Others have been downright bearish -- figuring the housing and consumer troubles would bring about a deep recession that the market wasn't prepared for. The stocks posting the best gains have been those tied to energy and global demand -- its a broad group that includes more areas of the market than most realize. I haven't kept track in the last week of all financials but I suspect that moody's performance is in the minoritiy -- most are probably flat.

Health care stocks -- too US driven so they don't benefit from overseas demand. They also don't have the product cycles to boost demand -- that business is finished because the generics and PBMs make growth difficult. The life sciences area is different -- lots of product cycles. Labs too -- not enough of the cost structure for the managed care and medicare people to attack like they have the hospitals although bad debt expense is something we will have to watch (consumer related).

everything consumer is suspect given all the issues.

lots of industrials though -- Emerson for one have strong demand. Energy is obvious. Technology -- its about product cycles and global demand and some techs have it and some don't.

At some point this rally will run out of gas -- the short covering will be over; the long only funds will have been pressured into buying; etc. Could be soon given yesterday's reversal. Are we headed lower again like January and March? That depends on whether there are more problems lurking within financials, whether overseas economies slow down, whether the dollar takes another plunge; rates rise; etc. we are like ducks on the water -- above everything looks calm and that is one reason the market is rising. below the water there is a lot going on and that is why we are likely to pull back at some point -- very useful prediction huh? right now I don't think we are headed for new lows. I expect the double bottom to work -- maybe it becomes a triple bottom. that said, I think I said similar bullish comments in october the last time the S&P was over 1400 (closer to 1550 actually).

once again its best to stick with stocks -- my musings on the market are for fun. stick with attractively priced stocks with strong secular tail winds and the competitive advantages to benefit from them.