Wednesday, November 14, 2007

Not in the Clear Yet

Yesterday's rally showed me that financials were oversold. That pretty much sums it up. That, and maybe retail will have a better Christmas season than expected. I'm continuing in my belief of a year end rally, although we're not through with the volatility. As I've said before, oil prices will come down some, and they have. The long term trend is up, and I think we'll settle somewhere above $80/barrel and under $95/barrel for the time being.

Prior to yesterday's rally, the bears were out in full force. I've heard not just recession talk, but "the coming recession," and what to do. People love the gloom and doom headlines, because it makes them feel that Wall Street is finally getting a dose of what we're seeing on Main Street. But there always has and will be a disconnect.

How good has Goldman Sachs (GS) looked compared to its peers? It seems almost too good. They are experiencing no major write-downs, while they profited by shorting mortgage holdings in the past quarter. I guess thats why they are the best.

We'll keep on our toes here. I'm looking for weakness as a buying opportunity in a couple of sectors: technology and international stocks.

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