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I am not a fundamental trader, but common sense says to look around and
see what is happening. We are in the season to be jolly. The Santa
Claus rally is before us as is the New Years rally and then the vaunted
January effect. The gurus are talking about Christmas sales being
better then expected, hyping banks because of the low interest rates and
even saying that the tech sector is safe once again to enter. Depending
on which set of charts you look at there are still stocks that are going
down as well as stocks that are going up. Many low priced stocks, the
former high flyers, are up 50% to 100%, if not more, from their lows.
Now comes the question. Looking at the valuations on the top 100 volume
leaders on the NYSE/ASE and the Nasdaq, the majority still have
valuations that are way out of whack. What happens when the gurus that
advise the funds and other plans go back to a valuation analysis? I
don't see many companies on those lists that have the capability of
growing at the PE ratios listed.
How much air is under this market? How much hope because of the success
so far in the war is causing the markets to rise? I am a pessimist, but
I will continue to do what the charts tell me to do. It is fun to step
back from the charts every now and then and take a look at the other
side of things. Have a good week. Ira.
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