As I said in my post last night, breaking 870 today seemed way to easy. Today we have a Meredith bounce, arguably the best analyst on financials on Wall St. who predicted most of what has occurred including the big bounce in financials in Q1. She echoed alot of my thoughts. The earnings for financials should be amazing in Q2 even though longer term she remains bearish. Like I said, the key is how they react after earnings. If the bounce extends on decent volume like it is today, the test of 870 held. Last quarter the market turned on Bank of America and Citigroup CEOs comments in early March that the banks made money in Q1. Meredith is big enough she could be the same type of catalyst. She is bearish longer term and so whether we hold the 895 to 902 level in the S&P will be determined how far Wall St is looking ahead past these numbers (assuming she is right overall). A few weeks or 3 to six months?
"Nothing improves on a core basis but you got so many things moving around that from a tactical basis basis if tangible book is moving up you don't want to be short these names going into it." - Meredith Whitney
Don't take this as being bullish outside of a trading call (the traders are taking full advantage today). She thinks unemployment is likely to rise to 13% or higher. Most bears are around 11 to 12%.
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4 comments:
I agree with the long term outlook on financials being bearish, but of course who knows what that term is. What do you think about short-term v. long-term for other solids, particularly a couple traditional solids I am watching like JNJ, KFT? Do you still see a pull back in these names, or is now a good time to get in for a long-term play?
I don't really give advice on individual names. The market will follow financials. Short term, next several months I think the market had a good chance to continue to rally (even if we break 870 and go to 840 in the next couple of weeks). I think we have another very big leg down. Companies like JNJ and KFT will outperform something like financials but if we do indeed have another big leg down (once again I think that starts several months out) these companies will also go down. Long term, like very long term, companies like these make sense but I would buy in 1/3s. Decided what you want to own, maybe buy a 1/3 now, 1/3 six months from now, 1/3 a year from now. That way if you do get another leg down, you still have dry powder to dollar cost average in.
Sorry about that - been reading the blog long enough to forget you do this for a living.
oh no problem. The issue is that if I recommended an individual name, the person receiving the advice has no idea what I am doing. I may be short something else to offset. I may sell covered calls, I may buy puts. I may do a straddle. There is so much more that I am doing with individual names that say I tell you I am buying Dell (which I not) it only tells somebody a little piece of a much bigger picture.
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