Don't fight the Fed | stockbee

11/01/2007

Don't fight the Fed

Don't fight the fed is a long standing market mantra and market participants were quick to push the buy button after the initial dip on interest rate decision. With 300 plus breakouts o upside, it was yet another good day. This time the market is starting to rally after the 50 plus readings having reached lower range. Which means many stocks in the scan are not overextended.

During this earning season the trend is firmly favoring large and mid cap plays. The small caps have not been good earnings plays so far. Large caps and large float stocks are doing well post earnings. Look at MSFT, it has followed through on earnings, which is very good sign for holders. Look at MA, SIMO, PSEM, SIRF, and IVGN, from yesterday, all broke out post earnings.

11 comments:

Mike said...

Looks like one should have fought the fed given the collapse that is coming today...

Lazy Investor said...

Hi Pradeep

I do not see the Earnings spreadsheet anymore. Have you moved it to some other location? Thanks,

Pradeep Bonde said...

It was not being updated regularly, so I removed it.

qt said...

Neither perma-bull nor perma-bear is a good stance to take. "Don't fight the Fed" doesn't mean anything when the Fed can't help an economy in trouble. Concerns over inflation are still there, and the bipolar market is making totally wild swings.

Why is it necessary to continually infuse so many billions into the economy? $41 billion is simply the most recent of the continuous infusions in the past months. I think this is troubling news.

Pradeep Bonde said...

100 years of market history across countries shows bullishness is right stance.
The economy is not as bad as perma bears make it out to be. 80% of what bears say is fiction or their own personal interpretation of events.

Hector Rivera said...

just getting closer to the american peso ;P

Hector Rivera said...

and inflation .78% in the last reading if you believe so

qt said...

And past performance is not necessarily an indication of future results, especially in a completely new economic environment.

I find this blog to be extremely useful and timely and I prefer the intellectual approach over any other financial blog, but the near-blind bullishness sometimes makes me raise an eyebrow. I'm by no means a bear, nor do I have bearish tendencies over bullish, but the current outlook makes me wonder and I can't help but question those overconfident that everything will continue to be fine fine fine.

Explain how the Fed's continued injections of billions and billions is anything other than a warning sign of how dangerous a potential downturn really could be.

Hector Rivera said...

qt, you forgot that between the Fed and the European Central Bank total infusion is almost 400 billion so far. No one know how much crap the people like Citi has in the books, or at least we dont know.

Pradeep Bonde said...

If you look at the best economic forecasting model in the market from ECRI, it is showing risk of recession as low. ECRI model is based on sound logic, it is not emotional thing or based on faulty understanding of economics.It is developed by people who understand economics and uses multiple factors. Most bearish commentators, look at one factor and stretch it to fit their world view.
Besides that if you just look at the leaders in the market, none of them is getting dented by this. In fact in last 4-6 weeks several new sectors are emerging as leaders. So a shakeout here of few weeks will again set up market for a bounce. Besides that 65 days bullish/bearish ratio is positive. So far in the market such corrections have been brief pauses, in fact I would like more weakness and panic, as that sets us up for a more robust bounce like we witnessed in August and September, where making money was very easy. I would prefer a multi day panicky sell off which washes out all bullishness and then sets us up for a bounce.

Fox said...

Why small cap is so unpopular at the moment? As far as I am concerned, small cap companies have high chances to grow in price and they can give bigger returns. Well, penny stocks are risky, for sure, but still the profits can be greater than with large caps!