Stock Market Analysis: 11/24/09

  • The bottom panel shows the relative performance of the oil service and exploration and production groups relative to the already disappointing Energy sector. The top panel shows the Healthcare sector and its component industries, which have all outperformed the market for much of the year, and the semiconductor unique boutique s on the bottom panel. The top panel of the chart below shows the absolute performance of the Energy sector as well as the Metals and Mining stocks. The Energy sector averages are dominated by the integrated oils like ExxonMobil and Chevron, whose profitability are cushioned by their downstream refining and marketing operations. There are numerous types of trading practices including intraday trading, short term trading and long term trading. I could not find any shares to short all day which was behind my sell-off thesis Monday night. Some of the rallies have turned violent, particularly in Milan and Turin on Monday night when angry youths threw petrol bombs and stones at police cars and smashed up shop fronts. As for the laggards, small cap stocks have been roughly flat for the entire year and underperformed the SPX more or less all year. As the year draws to an end, I would expect that these weak sectors and groups, such as small caps, energy and mining stocks, to weaken and then stage a snapback rally in the last week of the year.


    My base case scenario therefore calls for either a slow grind up in stock prices or a sideways consolidation for the first half of December, with a seasonal rally to begin in the latter half of the month. This pattern is suggestive of continued small cap underperformance for the next couple of weeks, followed by a typical seasonal small stock rally into January. As well as the stock market in general. For example, economic conditions may warrant a tightening of financial market conditions. On the other hand, the combination of negative divergences and sentiment models do indicate that caution may be warranted. It’s a high barrier of entry psychologically, especially if they’d been counseling caution all this time to their clients. That’s why it’s worthwhile to understand how he manages his investments and what he thinks about the airline industry’s present condition. Calculate the net present value of replacing the existing machine.



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