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| Friday Aug 11, 2006
An Unexpected Rally?Taipan Group's Dynamic Market AlertBy J. Christoph Amberger-- An Unexpected Rally? Risk-Free Test Drive: Turn $5,000 into $57,500...or Owe Nothing!” A simple trading system is quietly turning individual investors (some of them complete novices) into stock market wizards. In fact, it’s already delivered 160% in just 3 days. If you’re willing to learn an elementary two-step system, you’ll turn $1,000 into $11,500...or owe nothing. Try it now...risk-free! ---------------------- An Unexpected Rally?by Steve Lord The old saying goes that “bull markets climb a wall of worry.” And while the bull market aspect might be currently open for debate, we certainly have the worry part down pretty well: Lebanon, Iran’s nukes, new terror alerts for airlines, Iraq, options backdating, missed earnings, etc. In fact, with so many crosscurrents in the markets right now, investors would be forgiven for wanting to throw in the towel. Admittedly, there is a lot of evidence that money is leaving the market, either on account of the typical midsummer slowdown in trading, the reasons above, or both. But leafing through a chart book while on a marathon, 20-hour odyssey in the U.S. airline system yesterday, I was struck by how many equity charts actually look better than the headlines would suggest. Across a wide swath of industries, ranging from mining to industrials to software and electronics, many companies have not had the bloody summer you might have expected. Granted, they haven’t exactly shot straight upwards, but they have shown remarkable strength in the face of some pretty intimidating elements. And it is very useful to remember that in spite of it all, the Dow is a mere 500 points, or 4.5%, from its highs. All in all, we’ve held up pretty well. This has been partly due to the consumer, who accounts for two-thirds of the U.S. economy. Friday’s report on July retail sales showed a 1.4% increase, which surprised many economists and market watchers. After all, it came on the heels of June’s meager 0.4% rise and a myriad of other indicators that have begun to suggest the economy is slowing. Estimates were for a 0.8% increase, allowing for summer vacations and the additional consumer spending that typically comes with summer. The bottom line here is that the average American is still spending with relative abandon, something that we expect to see changing as the fall approaches. Although higher gas prices and higher interest rates are here right now, their full effects take six months or so to show up in consumer spending data. By fall, retail sales will be slowing. The next several months are therefore critical in determining whether the Fed was correct to stop hiking rates now, and frankly whether it has any chance of creating one of those ever-elusive “soft landings.” Although over the past 40 years the record is not good (1-for-7), personally I think chances this time are better than even. Clearly, the biggest risks to a soft landing are the ongoing global energy crunch and the geopolitical unrest around the world. But if anything, the overall global situation currently cries out for more liquidity, not less, and since most data coming into view suggest a slowing economy, the stickier inflation data will lessen as the economy slows. We think Bernanke is done for now. The real trick, as many of you know, will be what the Fed does once these two events have taken place (i.e., slower growth with slower inflation). If a soft landing is indeed engineered, how soon does Bernanke CUT rates? Conversely, if economic elements such as retail sales continue growing strongly, how long does he wait before resuming the hikes? Finally, what does he do if the worst of all possible outcomes -- slowing growth with rising inflation -- is the result? My take is that the economy is fundamentally more secure than many people think. As a discounting mechanism at heart, the market is currently pricing the slower growth we expect to be seen in the data come fall. And, as any market veteran will tell you, this suggests that by the time the actual data is in hand, the market will already be discounting the rebound, rate cuts, etc. Therefore, I wasn’t that surprised to flip through that chart book yesterday and not feel like the U.S. market was about to fall off a cliff. Remember, it is always darkest before dawn. But in the stock market, where future events are priced into stocks months in advance, by the time dawn appears most of the price moves have already occurred. Stick to your guns this summer. When added up, in spite of everything going on and plenty of evidence to suggest otherwise, I am increasingly convinced the markets will surprise us this fall with a push back toward new highs. Investment TVHe’s been giving you advice for years. And now you can finally see the man himself. Dynamic Market Alert is giving you the chance to watch and learn from Christoph Amberger in a video clip of Christoph doing what he does best -- advising you on your portfolio. Christoph will tell you about a great new biotechnology company that is selling for less than $2 and has the potential to change the lives of millions of people. This company’s new technology has been hailed as one of the greatest scientific discoveries of 2005 in an industry that analysts predict will gain revenues topping $5 billion in the next five years -- and you have the chance to get in on the ground floor. So come take a look, for the first time, at what Christoph has to say and learn about the stock that could have you earning 1,000% returns many times over in the next few years. To watch the footage, visit www.dynamicmarketalert.com/itv. ---------------------- Adstar Inc, Agilent Technologies Inc, Apogee Technology Inc, Bema Gold Corporation, Blue Square Israel, Medifast Inc, Netease.com Inc, and Radica Games are releasing earnings. Unlock Dates for the Remainder of August 2006 ---------------------- Upgrades and Downgrades Cephalon downgraded by Soleil from Buy to Hold, and by Merriman Curhan Ford from Neutral to Sell. ECollege.com downgraded by Stanford Research from Buy to Hold. Imax downgraded by Piper Jaffray from Market Perform to Underperform, by Susquehanna Financial from Hold to Sell, by Merriman Curhan Ford from Buy to Sell, and by Janco Partners from Buy to Market Perform. ADC Telecom upgraded by CE Unterburg Towbin from Market Perform to Buy. American Science & Engineering upgraded by Stanford Research from Sell to Hold, and by Roth Capital from Hold to Buy. Express Scripts upgraded by Morgan Stanley from Underweight to Equal Weight. LCC International upgraded by Punk, Ziegel & Company from Accumulate to Buy. AT&T upgraded by Matrix Research from Buy to Strong Buy. Brought to you by Red Zone Profits. ---------------------- |
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