Why this year could be like 1995 all over again!

  • April 18, 2006
  • Tim Truebenbach


Timothy J. Truebenbach is the
President of True Capital Management and general partner of True Capital
Partners LP, a hedge fund. He uses a disciplined model that trades on the
intermediate-term time frame. For a free trial to Tim’s Nightly Stock Analysis
Report

click here or call
888-484-8220 ext. 1.

There’s the market we all know and love! In all honesty, a
rally like we saw on Tuesday is no real surprise given the fact that it has been
in a confirmed uptrend based on institutional accumulation since mid-October,
2005. We have seen a distribution day here and there, but nothing that added up.
I receive many emails from disgruntled readers and subscribers to my service
that say I am always bullish and with that attitude I’ll be correct at some
point. WRONG!

For any long-time readers that have followed this column since before October,
2002 you saw me as bearish as anyone. In fact, I was often warning about false
rallies from March of 2000 until the fall of 2002 when many investors were
bullish. The fact is that we are headed higher BASED ON THE CURRENT EVIDENCE.

Technically, the major indexes saw a distribution day on Monday, but many
leading stocks declined on light volume (healthy sign) and others even rallied.
Itron
(
ITRI |
Quote |
Chart |
News |
PowerRating) broke out on heavy volume, for example. By leader, I mean this
is a stock trading at all-time highs, displaying double-digit earnings growth
and an ROE of 18%.

Cognizant Tech
(
CTSH |
Quote |
Chart |
News |
PowerRating) was another fundamentally strong company that
advanced to new highs on heavy volume. Many growth-style mutual funds showed
NAV’s rising after Monday’s close. This type of action usually precedes a
healthy market advance, and I am not just talking about the one we saw Tuesday.

This is a great time to think positive about the market. Look back to 1994: when
the Fed ended its rate-hike campaign the market entered a fantastic period of
advancing prices. To put it simply, if 2006 turns out like 1995 and you are not
properly invested you will not be happy with yourself. At this point, there is
no reason to believe that will not happen from here. If we start to see leaders
roll over and the market come under distribution we will again turn bearish; but
I don’t see that at all right now.

Good Trading!