Stock Market
All comments and Stock Market Ananlysis are made by Guy Brumley. Guy has been trading the Stock Market daily since 1992.
Trading, evaluating stock prices and predictions
Stock Market Commentary 8-24-2009
The DOW closed at its 2009 high on Friday, at 9505. The news on home sales and the optimism from the Fed chief helped fuel the rally. The DOW has been up six of the last 7 weeks. Trading volume was the highest since August 7th but still low for the week .
Existing-Home sales were up 7.2% for the biggest gain in the last decade.
The market is trading on emotion, meaning this is high-stakes gambling.
Is a stock fairly valued, or is it ahead of itself?
Fundamentally, we need an economy that has 4% unemployment, and a real estate market that is growing at 10% annually. That is not going to happen soon.
Emotionally, the average investor is scared he is missing his shot at retiring. Therefore, each day the market raises, the pain increases. All this talk of money on the sidelines, and the market crawling a wall of worry, is just daring us to call our broker and say get me back in.
Just remember, when you finally get back in, the rally will end.
The past six weeks have been moving higher on lighter volumes. The chart is showing another 5-6 weeks of upward movement into the last week of September or first week of October, before a break. Look for a level around 10,500 to 10,600.
The trades should be in stocks like CAT, AA, MT, X, and GE.
According to the DOW Theory, the Transport stocks should lead the recover in the Industrials by six months. I would watch FDX, CSX, JBHT, and YRCW.
Look for low priced options to play these, as the bottom could fall out when the market makers come back from vacation after the Labor Day holiday.
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