Two Ways To Look At This Market

This
is the market of two completely different personalities!  We saw
the positive one in the fourth quarter and the bad side came throughout the
first quarter.  The action has been back and forth just even in the last few
days…up and down, up and down, etc.

 

 

 

The biggest problem of late
is we are not getting good volume to the upside.  The NASDAQ blew its chance
at a follow-through day as volume came in lighter than Wednesday’s
distribution today.  The S&P 500 produced a large-volume “up” day; but it
killed its attempted rally in Wednesday’s declines.

 

There are two ways to look at
this market.  First, we are capitulating and that usually means a bottom is
near for this correction.  The selling from 4/13 to 4/15 was the first clue
that this might be occurring.  Secondly, there is no direction in place and we
are simply seeing buyers and sellers battle it out on a daily basis with no
long-term direction in place. 

 

My money is on the first
guess, but very, very conservatively.  The economy is growing or we would not
see the Fed keep raising rates.  This means that corporate profits should also
grow and stocks will rise.  We also have a NASDAQ at very low levels; similar
to the Dow in the 1930’s.  The problem is that we are not trending higher, so
anything we invest in the stock market may not do a whole lot for a while. 

 

The best stock in the market
is Google (GOOG).  They just blew away estimates and the stock is
soaring.  I have been talking about this name for the past 6 months as THE
market leader, and it probably has a long ways to go from here.  One thing to
notice is its very tight trading range while the market was declining.  Even
though 200+ million shares expired from lock-up during the correction, the
stock refused to go lower.

 

 

 

If you go into the market,
move in cautiously and slowly until we see convincing evidence the elephants
(institutions) are moving in again alongside us.