Well, we've sustained a minor sell-off of about 7% and the risk trade is back on. I believe the leading sectors in the 2nd quarter will be Technology and Financials, as that's where the prospects for growth are the strongest. Goldman (GS) and Citi (C) are leading the charge and BAC, JPM, and a couple foreign banks will follow. Goldman reported good earnings, but the stock tumbled due to speculation of Congressional action banning banks from proprietary trading. As soon as that talk bogged down, Wall St. propped GS back up to the 170's. Citi has been a stale fish for months until it received some positive news :
http://www.americanbankingnews.com/2010/03/10/citibank-stock-hits-fourth-month-high-nyse-c/
It went from $3.50 to near $4.20 in a couple days and continues to climb. Meanwhile, anticipation of Apple's ipad and new iphone coming out in the summer has shot the stock http://www.google.com/finance?q=aapl from under 190 to 225.
The only thing missing from this bull run is the strong presence of the energy and oil & gas sector. For that to significantly run, the economy must mount a significant strong comeback which I'm not sure it's ready to do yet. Financials have been beaten up so badly that they have room to run up just on the basis that they're getting their shit together, selling off some bad assets, issuing tons of debt which eager investors are eating up, and not making so many bad loans anymore! That is why I think that the market as a whole can't move forward until the Federal Reserve begins the process of slowly raising rates. This probably has no chance of happening till at least the end of the year or early next year, but if the economy is truly improving, and that's what everyone says is happening, then the FED must raise rates, even if it's just a quarter of a point. I believe if this happens the market will sell off for a day, but then CONITNUE to move upwards and all sectors will participate!!
Thursday, March 11, 2010
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