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Weekly Chartology: Goldman Praising Defensive Strategies
Shortly after adjusting his 2010 S&P target lower to 1,200, David Kostin continues to favor his Rosenberg-SIRP equivalent strategy of "low operating leverage, high dividend growth, strong balance sheet, large market cap, and 'low valuation'." In other words, with the entire market now turning defensive (but not David Bianco: David always has some funny wackiness up his sleeve that's for sure), it is a little difficult to see how stocks will push higher by 12% in the remaining 4 months of the year, especially with negative GDP prints anticipated for the remainder of 2010, which would be in line with the Zero Hedge-anticipated sub 1% Q2 final revision GDP. In other words the economy has stalled, and there is no stimulus coming: the $10-20 billion dribs and drabs pittances of fiscal stimulus here and there will do nothing to push the economy higher. Also, Kostin summarizes the findings of his latest Hedge Fund Tracker (we will post it shortly), which indicates which stocks are the latest HF hotels: in a nutshell these are EMC, ESRX, DVA, TYC, BIDU, PFE, INTC, and VIA. For people who have reservatoins against gold, and see it as a source of liquidity in a downturn, the same logic to the nth degree applies to these names. Should there be a selloff, these stocks will get decimates as HFs rush to get out. Also, Kostin summarizes the top ten S&P stocks by daily tading turnover, i.e., where the computers are running wild. These are Pactiv, US Steel, Abercrombie & Fitch, AK Steel, Apollo, Frontier, CF Industries, NVIDIA and DeVry: this is where the bulk of the binary action was in the past week.
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The "Greatest Depression"
"You're going to see it all over the world," Celente said. "What they call austerity programs ... What are they doing? They're bailing out the banks and they're making the people pay for it. And the people don't like that."
Celente pointed to a near-riot that took place last week in Atlanta when 30,000 people showed up to be put on a housing waiting list, saying that the event is a harbinger of what's to come.
http://rawstory.com/rs/2010/0820/economic-forecaster-greatest-depression...
I don't know man, if I sat out on my car in the parking lot and gave away free tickets for the chance to win $5,000 dollars - I'm sure I would get a massive crowd too.
While I do believe there are some systemic shocks that are coming down the road, don't think this is the harbinger of doom as it is made out to be. The people simply wanted subsidized housing, and will do whatever is necessary to get it. Just like my hastily-composed example, offer something for free - you'll get plenty of attention.
No doubt, the "Algo/Igor/Robo" trading platforms have been Hi-Fi trading these names with a bearish bias.
NVDA is alreay starting to turn up on massive volume, probably signalling a trend change.
Keep an eye on AKS, huge amount of shorts in that one:
And many of the retailers like M, TGT, LOW, HD have been showing relative strength the last few days. Even ANF got clobbered on its earnings report, but it failed to make lower lows the last two days...
Next GDP print will be positive than negative thereafter. I'll be reshorting into that false positive news.
Utilizing my mental exercise of "What is the most frustrating thing the market could do..." I'd say I agree RottingDollar. Some kind of half-hearted pop on whatever news, then the swan dive into the empty swimming pool.
I'll be poolside with my drink, waiting to get in on the action.
What is the Sharia view on defensive strategies?
Hey Tyler, any chance of a Minsky meltup this fall if QEII goes hyperbolic? Maybe play the melt up and have a cheap store of TP for the aftermath.
is there any more appropriate place for speculation than Mr. Bond? What will he do????.....
Thanks for such a great post and the review, I am totally impressed! Keep stuff like this coming!...
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