Monday Morning Musings
Back in the saddle after a restful weekend? Not. But who's complaining?
The market is getting a bounce at the open courtesy of an announced cease fire between Israel and Hezbollah. That is sending safe-haven investments like gold lower on the session. Oil is also falling, due to the downtick in terror premium coupled with the news that BP is going to keep the western half of its Prudhoe Bay oil pipeline open.
Bonds are also selling off, pushing the yield on the 10-year up to 4.99%. Retail stocks are the strongest so far, followed by industrials. Energy and materials stocks are off the most.
I still think that the oil service stocks are too low, especially given the strong earnings they reported. I would be looking to trim my exposure to the big integrateds and hold on to my service stock exposure, or even add to it.
I also think that the broker stocks are undervalued here, and remain perplexed at the low multiple afforded to these great companies.
This week is options expiration, so expect some added volatility to the usual nuttiness.
posted by J. Kahn @ 7:06 AM
2 comments
2 Comments:
I think today's action is very telling. We got that nice pop in the morning and the market has been selling into it all day. I think that shows that the market is in a distribution mindset. As I type this, the COMP is up 15 points and for the life of me, I can't find the strength. My portfolios are getting crushed today. The internals look bad for a rally.
This morning's pop was pushed by the lower oil prices eased by the mid-east cease fire (in addition to the BP/Prudhoe Bay news), so the reversal is telling me that the market doesn't exactly believe the cease-fire will hold very long. However, the oil and gas complex has kept dropping. To me, this signifies an inefficiency that can be exploited.
Kevin,
This market is thin, and can be knocked down easily. But the market often has a rough time in Aug/Sept., so I am not going to get too bearish.
Rather, I will be looking for the market to bottom somewhere in this time frame, and give us another strong Q4 rally like we got in 2004 and 2005.
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