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Goldata Financial
Dedicated to above average returns in the stock market.
STOCK MARKET COMMENTARY
December 08,
2008
From Elliot
Goldberg, Registered Investment Advisor, Goldata Financial
Last week, we got the first solid hints that Mr. Market has reached a comfort
level with the bad economy we are in and, more importantly, are likely to see
in the future. There were a myriad number of negative fundamentals thrown at
the market last week including earnings misses, projections taken down,
layoffs, manufacturing reductions, an official recession declaration, an
horrific jobs report, "human sacrifice, dogs and cats, living
together" (thank you, Bill Murray -- scratch that one). Yet with each
bit of negative news, a sell off ensued down to our technical support level
at around SPY83(our "shoulder") followed by a rally, none more evident
than Friday's reaction to the November jobs report of a loss of 533,000 (not
including the revisions to previous months, which made it worse). While one's
first reaction is to make sure the canned tuna and water are still fresh in
the bomb shelter, this instinct should be ignored. Instead, we must listen to
the market tell us that, as things stand now, the putrid fundamental news has
been largely discounted and the bullish technical pattern is reaching its
positive, final phase. This does not mean that we will necessarily go
straight up from here, although sharp rallies are possible. What it does mean
to this scribe is that rallies should not be sold and positions should be
accumulated below SPY85 with stops positioned at the equivalent point below
support at SPY83 to protect against this thesis disappointing us. Volatility,
unfortunately, will continue and must be respected, but should come in over
the next few weeks as more punters come to the same conclusion as I have.
More potential buy candidates are coming into buying range as each day's
passing bring their 200-day moving average closer to today's price. The
discipline of buying only stocks above their 200-day MA and tight stops has
helped keep losses to a minimum and kept us in some stocks that are actually
performing positively in this nightmare of a market. When we turn for good,
history tells us that these will perform the best, as we let them ride
"up and to the right". Risk/reward is now right for playing
for a potential bottom. If correct, then Seals and Crofts 1973 hit "We
may never pass this way again" will be a reality.
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