Half-way point
06/15/2006
I was asked my stock picks on CNBC this past week. As I explained there, whilst the main US index, the Dow is down from around 11700 to 10700 in a month, I would see the US markets as worth buying on value if it drops below 10600 and on price momentum if it goes above 11300.
Of course let us remember if the Dow falls another 10% it would still be at last October levels. Of course one reason for being positive is that the market is currently at 1999 levels. Equally, if you want to be a pessimist read into that that the market then hit 7,500 subsequently from being at those levels - that is a 30% drop further!
Personally, I think the US markets are strong; despite oil prices, war, rising interest rates, falling housing prices, corporate earnings are strong. The markets have just chosen to read negativity into things to take money off the table. Fine. So we wait for either value or price momentum opportunities.
Looking at my 'Value/Growth' picks for the 12 months ahead, well the portfolio from January is up 13% year to date.
The FTSE 100 fell sharply since the first week of May, then rose a little with some buying, but the sellers then pounded the market even further. Where now? If I was more risk-loving I would actually say I can see it rising in the next couple of months. What is clear is that direction is not clear.
You can start buying when the FTSE is above 5700 on price momentum, or buying because the index looks good value if it drops to 5200.
(Don't forget to email me if you would like the presentation on the stocks I like for 2006, which I broadcast on BBC2 - the picks in the past two years produced a 83% compound return.)
Value-Growth
Based on my value growth criteria which are based on stocks meeting revenue and profit growth and good value based on criteria such as price earnings growth -remember they are for a 6 month outlook: OPD, ROK, Severfield-Rowen.
Remember I am targeting about 20-25% with the value growth criteria. Last year it produced 33% return.
On my momentum value indicator (which tracks stocks with value but which in the short term also have money going into the shares) I have yet again Cosalt.
Crazy Small Stock
These are high risk volatile stocks which could move sharply higher or move sharply lower in my view, but will almost certainly not stand still. Names on the radar include: Patientline, GB Group.
Also, if you would like a free multi-media CDROM on 'Investing Better', which covers spreadbetting, CFD trading and momentum indicators like the MACD, posted to you then drop me an email with your postal address to alpesh.patel@tradermind.com.
Spreadbetters
Spreadbetters and futures traders often look at hard and soft commodities. Here's my quick take on the action for the week ahead:
- Oil: Sideways to up
- Copper: down
- Gold: down
- £/$: down
- Dow: Down
- FTSE 100: Down
- Soyabean Oil: Sideways
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