Financial stocks rallied this week from their lows.
Bank of America (BAC) was up about 8%.
US Bancorp (USB) was up about 9%.
Citigroup (C) and Wachovia (WB) were each up about 10%.
and Wells Fargo was up about 15% for the week.
When the financial stocks bottom, we will most likely have hit our lows for the year.
Price action in these stocks over the next month will dictate whether we have reached a short-term or long-term bottom.
Saturday, January 26, 2008
Market valuations near 2008 lows
The global financial markets continued to deteriorate over the last 2 weeks.
Wednesday we hit a candlestick bottom where the Dow Jones Industrial Average (DJIA) rallied 600 points from its bottom.
On Friday, the gains from Thursday and much of Wednesday evaporated with a nearly 200 point loss in the DJIA.
The technical trend is still down.
Stock valuations based on book value and past earnings have not been been this low in over 5 years.
For long-term investors, this is a great time to invest.
In the short-term, continued volatility and earnings downgrades are expected as consumer spending continues to decrease and global growth continues to decelerate.
Wednesday we hit a candlestick bottom where the Dow Jones Industrial Average (DJIA) rallied 600 points from its bottom.
On Friday, the gains from Thursday and much of Wednesday evaporated with a nearly 200 point loss in the DJIA.
The technical trend is still down.
Stock valuations based on book value and past earnings have not been been this low in over 5 years.
For long-term investors, this is a great time to invest.
In the short-term, continued volatility and earnings downgrades are expected as consumer spending continues to decrease and global growth continues to decelerate.
Tuesday, January 08, 2008
Financials Need to Bottom First
The overall U.S. stock market will not change course and move higher until the financial stocks lead the process of bottoming and turning over. Unfortunately this looks far from occurring as numerous banks, brokerages, and mortgage lenders hit new lows today.
Either one of two events should occur in the near future to help the market hit a near term bottom: (1) a major Federal Reserve cut in interest rates or (2) a dramatic panic selloff that purges all weak and fearful holders of stock out of the market.
There is a strong likelihood that both of the events above may occur, creating a market panic bottom.
Unfortunately until all of the bad debt in the financial markets is identified and properly accounted for, a major long-term bottom is not likely.
For long-term holders of stock, this is a good entry point.
Either one of two events should occur in the near future to help the market hit a near term bottom: (1) a major Federal Reserve cut in interest rates or (2) a dramatic panic selloff that purges all weak and fearful holders of stock out of the market.
There is a strong likelihood that both of the events above may occur, creating a market panic bottom.
Unfortunately until all of the bad debt in the financial markets is identified and properly accounted for, a major long-term bottom is not likely.
For long-term holders of stock, this is a good entry point.
January 2008 Market Stats
For the first 5 trading days of the year, both the S&P 500 and the Dow Jones Industrial Average are down over 5% each and the Dow Transportation Average is down over 9%.
The 10-year trasury yield broke below 3.8% today as well making current dividend yields for many stocks looking very attractive.
So much for January being one of the best months of the year for the market.
The 10-year trasury yield broke below 3.8% today as well making current dividend yields for many stocks looking very attractive.
So much for January being one of the best months of the year for the market.
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