Wednesday, September 3, 2008

More Bullish??

I am actually getting a little more bullish after today's action. I think that the BEARS had every opportunity to take the market down today. I must admit that I was worried when we got down early, but I was very encouraged by the late afternoon action. So many people are talking about going down and retesting the July lows on the S&P, and I am about to believe that it is NOT going to happen. Obviously we could get some data that could take us down, but right now I don't think we are going to get it.

Many are wondering why the falling price of oil is not serving as a catalyst to move us higher. I have a couple of thoughts on the issue. First, the rising price of oil did not crush the market as it was going up rapidly. It was cause for concern, but it never really single handedly slammed the market day in and day out like one would have expected. Now I usually ask myself the question "What does the market know that I don't?" when I don't think the market is acting as it should. The second thought that I have on this issue is wondering if many of the pros are letting oil fall as the speculators hold a fire sale (we know there have been several hedge funds in serious trouble). Could the professional traders believe that the oil trend is up, and just not be buying until support is established? I think this is the case, and I think we may test $100. I think we are in the bottoming process, but I am not ready to put money back into the trade. Just as I have said over and over again about the financials, I am willing to miss the first part of the trade to ensure that there is in fact a bottom in place.

Yesterday, I said that now is the time to find new leadership. Select retailers such as BKE have really been doing well. If the retailers are doing well, I am going to look to the REITS for the next leg of the move. One of my favorite plays in that space is WRI. This company is very well run, pays a healthy dividend, and is rebounding nicely off of its lows. I will be watching this one over the next few days. It ain't sexy, but it could hand you 25% over the next year if you get it at the right time.

I can't believe that I am looking at Seagate STX as a dividend value play, but I am. When tech recovers this stock is going to head much higher. When you use a common sense approach to the marketplace, you have to know that there is a need for storage. Now I understand that this is a commodity business, but these guys have been working to reduce costs and it is going to really pay off. Nice dividend while you wait.

For those of you that are wondering about my AMAT pick, I still think it has potential. Solar is NOT dead and AMAT is going to be enhanced by the solar demand---but the solar demand isn't their only act.

Now I get some critical emails and comments every time that I inject my political opinions into my market forecast, but I think after Palin's speech tonight, the market could bounce. She did an excellent job with her speech and I think the question as to whether or not she will remain in the race has been answered. She will. Like it or not, I think the market bounces if we see McCain/Palin pull ahead--we know that the free markets do better in times of LESS TAXATION.

I still own and like EME and SWS. I am working on a system of position sizing and strict exit points. Hopefully, I will have excellent results with the new system and share them here---but I have to be successful first. I did close out my SPY short today and am adopting a cautious bullish bias. I have several new stocks that I am researching, and will have some new names shortly.