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Goldata Financial
Dedicated to above average returns in the stock market.
STOCK MARKET COMMENTARY
July 27, 2009
From Elliot
Goldberg, Registered Investment Advisor, Goldata
Financial
Last week, the previous week’s rise in the averages persisted. Earnings
reports continued to come in with most reports showing a beat on the bottom
line (earnings), but the top line (revenue) light. The exception to note is
Ford (F) which must be given kudos for limited losses to $.21 ($.64 expected)
in this economic environment. I’ve been down on all the car companies
to date, but these guys have pleasantly surprised me, first in not taking
TARP funds from the government last fall and then outperforming significantly
in this economic environment. We have had some hedges on for the last four
weeks and they did their job for the first two (in a sideways to down market)
and have worked against us in the moon shot of a market in the last two. With
Thursday’s market spike on word that the Senate would hold off on any
health care bill until the fall, I went back to the drawing board and
reevaluated the current strategy. The technical picture shows an upside
breakout, which would normally lead to a bullish stance. However, just as we
dismissed the “reverse head and shoulders” bearish technicals of a few weeks back based on the lack of
volume, this breakout does not show the pickup in volume needed to sustain
it. Therefore, we’ll continue to hedge in lieu of cash and continue to
monitor volume and price action. In Washington, Friday brought the beginnings
of a return to fiscal sanity as the fiscally conservative
“blue-dog” Democrats in the House (with the help of the
previously mentioned Senate action Thursday) put the kibosh on the current
version of Obama’s health care reform, agreeing with the Congressional
Budget Office that it did not meet Obama’s goal of stabilizing or
reducing health care costs. Bipartisanship slipped another notch as
Congressman Waxman (D-CA), head of the House Energy and Commerce Committee,
threatened to bring the bill to the floor of the House without the support of
his own party in his committee. Health care spending is currently 18% of our
economy and the current Administration policy of ram-down as quickly as
possible flies in the face of the old adage of “measure twice, cut
once”. Congrats to the blue-dogs. Gameplan: I
continue to look for a sideways to down market in the next few weeks, with
choppy trading. We’ll lean long, but will not be afraid to let the
hedges run (for gains) should the market falter. Long stops tight.
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