Fly On the Wall at Zacks - Weekend Wisdom
What They Said
- Kevin Matras, editor of Chart Patterns Trader and Options Trader
- Sheraz Mian, editor Zacks Top 10 Stocks
- Tracey Ryniec, editor of Insider Trader and Turnaround Trader
- Bill Wilton, editor of Home Run Investor and Small Cap Trader
- Todd Bunton, co-editor of Reitmeister Value Investor
- Dirk van Dijk, Senior Stock Strategies for Zacks.com
- Kevin Cook, editor of the newly launched Tactical Trader
- Yours Truly...all around good guy ;-)
Why Were Stocks Struggling Earlier this Week?
"It's all Europe related. The expectation in the market was that the ECB was waiting for the EU leaders to come up with a framework for fiscal union in last Friday's summit. They did and the stock market cheered them on at first. And then the ECB didn't show up for the fight which pushed stocks lower."
"The market selloff this week seemed more like panic selling than a shift in fundamentals. Did last Friday's summit "fix" Europe? No. Far from it. But I don't see a Lehman-type event hitting our shores soon either."
"The market simply got ahead of itself. Volatility within this range is likely to continue until a clearer catalyst is seen. Fundamentally, nothing has really changed in the last few days. I chalk this up to technically related, directionless trading, until new fundamental information hits the market."
"This is a "retreat from risk" by institutional Portfolio Managers on the fear that Europe gets worse because it is clear that Germany & ECB will let it get worse. Throw some China softness and the ECRI recession call on top of that and growth prospects for next 2 quarters start to look shaky with 45% of S&P profits from abroad."
Where Will the Market Be 3 Months from Now?
"The bond market doesn't need to see massive bond purchases from the ECB for Italian bond yields to come down. A mere commitment from Mr. Draghi will do the trick. They have to do that. Once the ECB comes out with that commitment, we will start a spontaneous rally pushing stocks up 5%-6% in a couple of days. And we keep trending up from there onwards."
"Still a bull, looking for S&P 1,175 to hold. And still calling for minimum 1,300 by year end. This current malaise and doubt is just the sort of fuel to get us there. 3 month target = 1,400."
"I believe the market will push higher between now and the next 3 months with my target price being 1,325/1,350 for the S&P. The most compelling reason for a higher market call is the US economy, which is finally seeing real improvement in its labor force, and growing evidence that the economy is picking up steam."
"I think we rally into year end. We have a nice wall of worry to climb. The U.S. might be the best looking horse in the corral of the Glue factory, but it is never the less the best looking horse. Other investments, such as bonds, cash and real estate, look very unattractive right now, and the money has to flow somewhere."
"Maybe I need to get into the holiday spirit, but I just can't shake this overall bearish tone. In 3 months I see the S&P around 1,125 - 1,150, or at least has hit that level by then. I think we are heading lower mainly because the best case scenario (mild recession in Europe) is still not that good and is heavily outweighed by the worst case scenario. We could easily see a debacle in the debt crisis in Europe. We also could find that China's economy as a whole is a sham, or at least not nearly as stable as they want the world to think. To me it just looks like much more downside risk relative to upside gains. Why will people risk losing 25% to gain 5%? They won't, so we will see some heavy selling in January, if not before."
"The Chinese economy is slowing for the first time in 3 years. Housing prices have plunged in Beijing and Shanghai. Manufacturing data has fallen to February 2009 levels, which was the height of the Great Recession. The Shanghai Index has retreated to March 2009 levels. China is flashing red for "warning." I'm expecting a weak stock market to open up the year as the Eurozone crisis will be raging with few concrete "solutions" and China will attempt to engineer, in the best case scenario, a soft landing. Look for the S&P 500 to test the 1060 level sometime in the first quarter."
What to Do Next?
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