闯荡华尔街
有多少爱可以重来 有多少人值得等待 因我自横刀向天笑 故我自立马冷眼瞧
正文
What I have seen
In last a few months, the market has experienced a dramatic leadership change. Since the change is so dramatic, as far as I can see, a lot of people were confused or felt uncertain during this period (including myself). Now let me summarize some points that I have observed so far.
1. The most important positive sign so far is that good earning reports are consistently rewarded with higher stock price. Examples: AKAM, RIMM, ORCL, HPQ, CSCO, GS, LEH, MS.
2. The scecond important positive sign is that a lot of stocks (sectors) have not declined meaningfully on bad or not so good news. Some sectors like semiconductor even rally on bad news. Though the stocks hit by bad news have not really kept going up like the stocks with good earnings.
3. The third important positive sign is that the strength in individual stocks does spread into other stocks, and the weakness in individual stocks usually do not spread into other stocks.
4. If the market will likely to go higher as long as the points 1, 2 and 3 are valid. This week and the next will be the crucial weeks to see if those points are still valid. Mostly likely it will be.
5. The strength in individual stocks and the market as whole right now cannot be really explained by the fundamentals. One unusually explaination to this is that up to May 2006, energy and commodity became a very crowded trade while other sectors are almost derserted by everyone (at least by hot money). If one looks at the five year or six year charts, energy and commodity are the only sectors that significantly higher. Now it looks like a reveral trend is going on. If that is the case, it will continue longer and farther than people expected.
6. The thesis in energy has changed from demand outstrips supply to supply outstrip demand since OPEC has started to cut production rate. If this situation continue for a while longer, there will be more downside on energy price since in last a fews years, the main reason for energy price to go up is the fear of the supply cannot meet demand.
7. Since engery has been a crowded trade for so long, it will be difficult for big guys to get out (That means, most of these guys are still in). That may cause some disruption in the financial system sometime in the future.
8. The news from economic front and company earning reports will not be very exciting in the near term. So it may not be a good idea to predict the market or stock price actions from fundamental news.
9. The strong sectors right now are technology and financials. For financials, it is strong since the interest rate and trading enviorment are their friends for now. For insurance companies, they get higher premium from last years natural disastors and there is no similar problems this year (that means they get a windfall of money). For technology stocks, it seems they are way underowned by mutual funds (that is the feeling that I got by checking the top ten holding of large fidelity mutual funds). Besides the technology companies are doing fine compare to other sectors.
10. The main leaders in techs are MSFT, CSCO, INTC, ORCL, HPQ. Their leaderships probably are based on a few factors: first, their business has been stable in last six years (or start to improve recently), secondly, the stocks has gone nowhere for six years, thirdly, the stocks are under owned for quite a while. Though one may not suggest an unlimit upside for these stocks, the performance of those stocks will be stable and stablized the tech sector.
11. Most of my money is made when the market is stable (to up) by buying stocks reaching 52 weeks high with technical and fundamental behind them. Right now the stocks that I can find
are RIMM, AKAM, NVDA, GS, LEH, ORCL.
In last a few months, the market has experienced a dramatic leadership change. Since the change is so dramatic, as far as I can see, a lot of people were confused or felt uncertain during this period (including myself). Now let me summarize some points that I have observed so far.
1. The most important positive sign so far is that good earning reports are consistently rewarded with higher stock price. Examples: AKAM, RIMM, ORCL, HPQ, CSCO, GS, LEH, MS.
2. The scecond important positive sign is that a lot of stocks (sectors) have not declined meaningfully on bad or not so good news. Some sectors like semiconductor even rally on bad news. Though the stocks hit by bad news have not really kept going up like the stocks with good earnings.
3. The third important positive sign is that the strength in individual stocks does spread into other stocks, and the weakness in individual stocks usually do not spread into other stocks.
4. If the market will likely to go higher as long as the points 1, 2 and 3 are valid. This week and the next will be the crucial weeks to see if those points are still valid. Mostly likely it will be.
5. The strength in individual stocks and the market as whole right now cannot be really explained by the fundamentals. One unusually explaination to this is that up to May 2006, energy and commodity became a very crowded trade while other sectors are almost derserted by everyone (at least by hot money). If one looks at the five year or six year charts, energy and commodity are the only sectors that significantly higher. Now it looks like a reveral trend is going on. If that is the case, it will continue longer and farther than people expected.
6. The thesis in energy has changed from demand outstrips supply to supply outstrip demand since OPEC has started to cut production rate. If this situation continue for a while longer, there will be more downside on energy price since in last a fews years, the main reason for energy price to go up is the fear of the supply cannot meet demand.
7. Since engery has been a crowded trade for so long, it will be difficult for big guys to get out (That means, most of these guys are still in). That may cause some disruption in the financial system sometime in the future.
8. The news from economic front and company earning reports will not be very exciting in the near term. So it may not be a good idea to predict the market or stock price actions from fundamental news.
9. The strong sectors right now are technology and financials. For financials, it is strong since the interest rate and trading enviorment are their friends for now. For insurance companies, they get higher premium from last years natural disastors and there is no similar problems this year (that means they get a windfall of money). For technology stocks, it seems they are way underowned by mutual funds (that is the feeling that I got by checking the top ten holding of large fidelity mutual funds). Besides the technology companies are doing fine compare to other sectors.
10. The main leaders in techs are MSFT, CSCO, INTC, ORCL, HPQ. Their leaderships probably are based on a few factors: first, their business has been stable in last six years (or start to improve recently), secondly, the stocks has gone nowhere for six years, thirdly, the stocks are under owned for quite a while. Though one may not suggest an unlimit upside for these stocks, the performance of those stocks will be stable and stablized the tech sector.
11. Most of my money is made when the market is stable (to up) by buying stocks reaching 52 weeks high with technical and fundamental behind them. Right now the stocks that I can find
are RIMM, AKAM, NVDA, GS, LEH, ORCL.
Grace