S&P 500 being the-most watched by technicians are being interpreted to the hilt......
Some are predicting as low as 805....
Most knowledgeable ones are saying no lower than 850....
We closed @ 879.13......
SO.....IF we take the realistic number of 850 then the downside risk is 29 points in S&P 500 or 3.3% downside risk......
UPSIDE target in S&P 500 is a realistic challenge of 956.23 area or a gain of 106 points from much talked about support of 850 which is a move UP of 12.5%.......
SO...we have a CHOICE of worrying about a 3.3% drop OR positioning for a 12.5% move UP....
Most traders/investors will like this Risk/Reward ratio which is tilting towards huge gain.....most high beta stock will move way more than S&P 500 gain.....
As markets are in basing mode and MAY have tested its support around 869.32 ALREADY..so do not count on lower S&P.....IF this is the case then we MAY start moving UP as of this Monday....
Why this OPTIMISTIC view when most pundits are pessimistic about market strength?
AGAIN.....I rely MORE on "contrary" SENTIMENT indicator....more bearish the pundits..the better I feel....& markets generally do NOT accommodate the HERD......
This pullback is extremely healthy for markets going forward....as we needed to ratchet down our expectations for economy.....
Move of 48% from March low to second week of June highs in S&P 500 was pretty "dramatic" which represented a "euphoria about economy".....that was too much to expect too fast......
Now ..we are in a "more realistic mode for economy" where even a discussion for second stimulus is being talked about...which only confirms that economy will show improvement in Q4..not as of yesterday.....thus a pullback in markets to adjust to new reality.....
As this recession was way deeper than any recession in history....so a Q4 improvement is not only realistic but it IS the-best which CAN be expected given the financial mess.......
ER from GS,GOOG will be better than expected..which will give lift to the markets and technology stocks will outperform AGAIN.....
Most stocks are oversold in Techs,Oil,Gold,Ag,Solar,Financials..so a diversified approach in all of these sectors are highly recommended......
Making money is NEVER easy..it needs a combination of risk taking,sector knowledge,technical analysis......if you apply these three @ right moment.....then rewards CAN be very gratifying....
Look for "relative strength" within each sectors based on recent TAPE.....as they will move FIRST......
It IS almost like buying near March lows all over again.....so an aggressive approach MAY pay off in a big way.......
Why am I so OPTIMISTIC ?????
Oil near recent lows......
Gold near recent lows....
Markets near recent lows.....
I have "rarely" seen these three behaving so poorly @ the same time???
Because they ARE behaving so poorly...thus a "bottom is @ hand or has already reached"
My personal exposure in equities are HIGHER than @ any time since March lows......based on my OWN analysis of Risk/Reward.....
I cannot be MORE clearer as to how I see markets in short term......
BUT..you have to be comfortable with your OWN risk appetite....based on your OWN risk tolerance....every investor/trader has to find their OWN comfort level......
BLOG does NOT give buy or sell.
Saleem
8 comments:
SALEEM
Looking like you are extremely happy here/ Me too!
Gasoline in DC $2.45.
Lots and lots of Brand new cars on the highway.
Hosing is in the dumps in DC, the real estate people are in the dumps about property values/
I still like MRK and BMY--Cramer like them and hate RIMM and love Verizon. His show is hard to watch any more--great entertainment, however.
I am banking on a GE run here, way over sold, RSI is 28-----wow
God bless all of you
Hi Madmax,
I will be happy once markets take off......
Cramer is just one person doing his famous flip flop...does his opinion matters....not really....
No good stock needs Cramer "stamp of approval"
Most of his recommendations are to be sold in AH....
His take on market was good initially but he remained "too bullish" while the "barn was on fire"
We need to adjust our exposure based on euphoria & fear...I do all the time.....
Real estate in US will take another year before it bottoms out..Cramer was wrong on that also...but he keeps justifying his call which IS wrong.....
Saleem
SALEEM
Great analysis I appreciate your reply as always you add value to all that that you touch
I am glad to call you a friend
Hi Madmax,
Thanks for your appreciative note..
We are in this together!!!!
Saleem
Hi All,
Last week was kinda dull. Activity in Washington D.C. as far as business goes looks great. You don't see all the closings like down here in ATL. Empty store fronts where ever you look. Empty commercial buildings. Empty rental housing offering free rent. After 8 months I got someone in my rental at a reduced rate. Would enjoy a rally to boost options values.
Best Regards
Hi Standards,
DC is in a world of its own funded by Govt spending & lobbyist....
Reality is much different in CA,NV,AZ,FL.....
I am glad you were able to rent after 8 months wait....it is all about cash flow these days.....
OE will give us the fireworks !!!!
Saleem
Standards
In DC we feel the lack of money but there is so much
Gov't spending going on that we some how continue to get buy we sorta ignore the rest of the country
We are in our own bubble
I am so sorry that we did not meet up
I am at the FAA down town
My house does not come close to covering my nut
it is a lousy market
Not easy here either
Cheers to all
Hey Max,
There is a restaurant called the Amsterdam falafle house about a block off Connecticut, I think 13th where all the bohemian locals are. Really cool and great food, try it out. Find it on trip advisor.
Best Regards
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