Posts Tagged ‘Ahead of the Street’
Long-time readers know of my affinity for following a number of large-cap, benchmark stocks for the purposes of honing my own stock market view. Every quarter, I always write the same thing—that earnings season is the absolute best time to be researching the stock market and new investment opportunities.
All kinds of companies are reporting good news now, but it may not be enough for the stock market to keep appreciating. A new earnings season is just beginning, but these seasons come and go awfully fast. What this stock market needs is a new catalyst. Without one, I think the main averages will drift lower.
With the exception of mining stocks that move commensurately with the underlying spot prices of precious metals, the trading action in a lot of growth companies has been robust. Even recent initial public offerings (IPOs), which usually come to market expensively priced, are doing well in an environment where investors have no other choice but to be buyers of stocks.
Most of the news out there is getting better, but the stock market’s been taking a bit of a rest and that’s good. We’ve also seen a real pullback in commodity prices and this is well deserved. I don’t like it when markets go up indefinitely without corrections. It’s not healthy and bubbles almost always end badly.
A lot of initial public offerings (IPOs) have hit the market recently, and that’s no surprise—the stock market’s been strong. Times have been tough in the investment banking industry, but this changed recently with the much improved sentiment in the broader market. We can never forget that everything in the investment business is about perception.
I actually think that large-cap companies will be the big story going into 2011, at least for the first half. While smaller companies traditionally do well coming out of recession, this time around, the big companies have the cost structure and pricing power to accelerate earnings at a rate much greater than revenue growth. This is good for the stock market and the economy—in the short term.
It’s looking like the main stock market averages are hitting key resistance levels as they continue with their upward bias. Trading volume has been mediocre, but, then again, it’s been that way since the financial crisis. What the stock market really needs is a good catalyst—a positive catalyst that can help investors take their buying to the next level.
Long-time readers of this column know of my affinity for reviewing winning stocks. Even just a cursory review of stocks that have done very well helps in my view to improve your stock-picking skills. At the very least, it helps to develop your market view. It’s like a race car driver reviewing tapes of previous races; the process of doing so improves your own skill.
The stock market is going up. Precious metals are going up. Housing prices are starting to go up. The prices of oil, sugar, coffee, wheat and corn are also going up. There are only two things left to go up in the financial world, and those are inflation and interest rates. Make no mistake; the monetary policy environment is going to experience a dramatic change this decade. If you’re not careful, you just might get sideswiped.
Profit Confidential — IT'S FREE!
"A Golden Opportunity for Stock Market Investors"