Mark Fichera currently uses skills learned over the past 40 years to provide investment ideas based primarily on technical analysis. He is particularly well versed in point and figure charting, trend line charts, Japanese candlestick complimented by various technical indicators and...
Published Date: February 23, 2008
Mark Fichera
It's 6 AM Friday morning in cold and windy New Jersey !! I just returned from Florida and already miss the warmth of the Florida sun. The market's " warmth " just keeps " going on " ( courtesy of Marvin Gaye ) . We are in the ninth month of a rally that has kept a considerable number of investors nervous, concerned and on the sideline with their money. However this plays out, I would expect higher stock prices during the balance of 2007.
The focus this month will be primarily on Precious Metals and Technology, along with a brief market comment. Topic selection was prompted by current market action, a brief look at market activity for the past 7 years, and some everyday personal observations. First, let's take that brief look at the " Market ."
We have read and heard of the duration of this market rally " without even a 2 % correction ." You tend to expect and are worried about an impending significant market drop. When you combine this nervous " bullish condition " with more than ample sideline liquidity, a decent economy and a positive technical environment, I remain a " nervous " but committed 2007 bull. I expect higher prices during the course of this year.
Market sentiment is the most discussed negative indicator. There are too many bulls in the various surveys of market professionals. But they talk bullish and act bearish. One unsophisticated way to observe this is the action on the Chicago Board of Options Exchange. Put buyers show rather quickly when the market takes a brief dip as it did over the past few days. Corrections can occur at any time. They might be brief, a few weeks, or they could last somewhat longer. The reluctance to believe this rally, however, has kept lots of cash on the sidelines. Take advantage of these opportunities to build positions.
Gold and Silver have both broken out and above their respective trading ranges. These boundaries have been in place for approximately one year. Gold traded between $ 575 and $ 650 per ounce with a few brief exceptions. It closed yesterday at $ 683, not only significantly above the $ 650 level, but also decisively above its next resistance at $ 675. Next target is between $ 715 and $ 725 per ounce. Silver crashed though resistance at $ 14.00, closing at $ 14.25. It has some resistance at $ 15.00, but appears poised to hit its next target, $ 18.00, within the next month or two.
The Precious Metals Index, XAU, which represents 15 stocks, has not yet had a similar break-out. It needs to exceed 150 before a prospective move to its next objective, 170. The stocks have lagged the metals for some time. Political considerations have played an important role recently, with unrest in Venezuela and Bolivia hurting certain companies. Will the stocks play catch-up and possibly lead the metals higher ?? We should know this answer within the next few weeks.
NASDAQ, the home of most technology stocks is the stepchild of the current market rally. Its 2006 gains were between 9 and 10 %, while the DOW Industrials and the S&P 500 were up 16 % and 14 %, respectively. The DOW Industrials, Transports, and Utilities all have hit new highs this year, while the NASDAQ is some 40 % below its January 1, 2000 level, and more than 50 % below its all time high of March, 2000. Companies are flush with cash and to this point have used it to buy back their own stock or acquire other businesses. A casual observation of most business establishments, particularly retail, reveals very " old " computer equipment still in use. I can see a new wave of " Technology Spending " possibly beginning within the next 3-9 months. Semi-conductors and those companies that supply the chip manufacturers should be prime beneficiaries.
That's all for this month. Talk to you again soon.
The opinions and commentary provided by the advisors in the My Automated Advisor Newsletter are the opinion of those advisors and not of My Automated Advisor.
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