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Goldata Financial
Dedicated to above average returns in the stock market.
STOCK MARKET COMMENTARY
August 10, 2009
From Elliot
Goldberg, Registered Investment Advisor, Goldata
Financial
Last week, Monday brought word of better than expected news in two areas ---
first in the earnings from a few European banks and then a domestic
manufacturing number that surprised to the upside. In addition, the
inevitable sell-offs required for a successful trading strategy continued to
be less and less harsh, a strong clue that demand for stocks was increasing.
This led to yet another trip back to the drawing board to evaluate the
trading strategy currently being implemented. The conclusion reached was that
the trading strategy envisioned just five weeks back was unlikely to be
successful going forward. Hence, Monday brought a change back to the tried
and true -- buying stocks just above their 200-day moving average with stops
below to protect the downside. Current bullish action in stocks is telling us
that Mr. Market is looking out 6 to 9 months and seeing things getting better,
leading to earnings following suit. The fixed-income market concurred as
spreads over Treasuries continued to narrow. Although current anecdotal
evidence does not jive with this, experience (2003 the latest version) tells
me not to ignore these signals and to get on board. Certainly, the slow shift
in the political winds has helped. Each day brings lower approval ratings for
the President and Congress, which the market is interpreting as lowering the
odds of any major health-care legislation passing. Desperation was apparent
as the Democrat’s dusted off the “vast, right-wing
conspiracy” theory from the archives to explain how the opposition was
shipping in ringers to town-hall meetings in order to create the illusion
that their constituents were unhappy with any changes to their health-care. For
me, the litmus test is that I am willing to accept any health plan that
Congress, itself, is subject to. It is only then that I am sure that it will
be thought out and advantageous to all. In the “do as I say, not as I
do” department, Congress has decided to buy an additional $500 million
worth of jets for itself, on the taxpayer’s dime, to shuttle themselves
around. Doesn’t the same argument against this type of travel for
CEO’s of taxpayer-funded companies apply? What hypocrisy! Conclusion: Markets have shown
themselves to be healthier than one would think, based on current conditions.
Mr. Market is omnipotent, second only to the big guy upstairs. We must resist
the temptation to impel our will on the market, always listening and
following the clues it provides.
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