Updated Thoughts on the Recent Price Action
I always try to keep an open mind when it comes to the stock market. I look at the positive and negative signs and adjust my investment levels accordingly. Unfortunately, I am seeing more negative signs right now and feel that some caution is warranted. NEGATIVES: 1) The number one sign I use to evaluate the health of the market is the price action of leading growth stocks. The recent selling in many leaders is [...]
My 2 Cents on the Alibaba IPO
For the past few weeks, the financial media has not stopped talking about the Chinese company Alibaba, which is going public this Friday. My biggest concern is that the retail investor is going to get screwed because they have been brainwashed that this will be the greatest IPO ever and they HAVE to buy it. Here's some historical perspective (i.e. two examples of companies that were also "hyped up" before their IPOs): 1) $BIDU - [...]
My Thoughts on Wednesday’s Fed Meeting
The Fed is NOT going to raise rates anytime soon. In their statement on Wednesday, I feel their language will remain dovish. Here are my reasons: 1) There is no question that some parts of the economy have improved over the past 5 years, but there are other parts that are still fragile (specifically wage growth, housing, and the retail sector). The last thing the Fed wants to do is raise interest rates too soon [...]
Crazy Prediction
1) During the 2008 financial crisis, the Federal Reserve stepped in to provide liquidity and took measures to possibly prevent the US from experiencing its worst depression since the 1930s. Whether we agree with what they did is not the point. In their view, the Fed did what they had to do to keep the banking system from collapsing and to help the economy get back on its feet again. 2) Now, in 2014, many [...]
2 Stocks That Could Be Higher By Year-End
Readers of my blog know that I have liked Netflix $NFLX for a long time. I continue to feel it will move higher over the next 6-12 months for the following reasons: 1) Fundamentals - The company has posted triple-digit earnings growth for the past 6 quarters. Their revenues have accelerated to a 25% growth rate and their margins continue to expand. Their subscriber growth still has huge potential, especially when they enter countries such [...]
Sentiment Turns Negative…Again!
For the past 2-3 years, a similar pattern has repeated itself in the financial markets. The major indexes start to break down towards their 50-day moving averages, the overall market starts to weaken (usually sparked by a geopolitical event), and then sentiment turns EXTREMELY BEARISH in a short period of time. It happened again over the past 2 weeks. Here are 3 examples: 1) The CNN Fear/Greed Index (measured from 0-100) moved from 95 to [...]