Overheard On The Street
Here’s what they’re saying at mid-day:
Brian Belski, Fundamental Market Analyst,
U.S. Bancorp/Piper Jaffray: “Doubt and cynicism will likely be central and
vocal expressions this week, following a courageous rally on Friday, October 13,
2000 that took everyone by surprise. Let’s face it, the duration and prowess of
Friday’s rally was unexpected given the calendar (a Friday in October following
five consecutive weeks of negative returns) and the atmosphere (international
turmoil, energy prices, earnings warnings, etc.).”
“But the stock market has been doing the unexpected now for the past few
years, so expecting its correction to end or change direction a certain way
(capitulation) is probably not the correct assumption or diagnosis. While
opinions differ whether or not such a capitulation occurred, we are instead
focused on the outperformance of the Nasdaq Composite last week as an early sign
that a preliminary stabilization is beginning to take shape.”
Paul Rabbitt, President,
RabbittAnalytics.com: “Can it get any worse? Yes, but it probably won’t. Markets may have reached a climactic bottom last week
when the U.S. naval ship was bombed in Yemen, tensions escalated to near-war
footing in Israel, and a Saudi Airline was hijacked. The corporate earnings
season peaks this week. We expect 16% to 17% EPS growth in the S&P 500 this
quarter.
“Bullish sentiment has fallen to the lowest level since the May market
low (a contrarian positive factor). The put/call volume ratio is within the
highest 10% of its range in five years. With put volume this high, reports are that
market makers have been forced to short stocks to stay market neutral. Any rally
could bring a short squeeze.”
Paul Desmond, President, Lowrey’s
Investment Research: "Market declines of this size already seen typically
do not end, on a trend basis, until one or more days of panic selling cause
sellers to throw in the towel. Without this kind of capitulation, new selling
quickly reappears again, smothering the next rally attempt. Thus far, there have
been very few signs of panic selling. The number of stocks making new 52-week
lows has expanded only moderately. While there is always a temptation to rush
back into a rapidly declining market, patience and discipline may be the key to
investment profits in the period ahead."