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.