Earlier, Toddo asked me if I was bullish. The answer is that it depends on your time frame.
As I said this morning, I think the markets have another 5% to 7% potential upside near-term, as economic and corporate profit woes are unlikely to pound stocks that are covered by the broad excuse, "The war impacted our results." It's kinda like the "Bad weather hurt our results" excuse used by poorly performing retailers. Whether it is right or wrong isn't relevant -- it just is what it is.
While the market is not up today, it is not down big after two much worse-than-expected economic releases.
Looking over the current landscape, there is event-risk on both sides. If Iraq folds and anyone left surrenders, the market makes its move to upper end of range in about a minute. If Iraq's republican guard (I won't capitalize the name) throws chemical weapons at our troops, there is sure to be a sharp move lower. Odds are that the drop would be buying opportunity because we know who is going to win this war. There is absolutely no way to guess which will happen first.
As a result, even though I think there could be a 5% to 7% rally from current levels, I wouldn't bet a whole ton on it, especially because I believe that the economy has more risk than just Iraq.
As the market approaches the upper end of the trading range on the daily charts, runs into resistance on the weekly charts and becomes overbought on both, I would anticipate being even less enthusiastic than I feel right now.
So to answer Todd's question: If you're a trader, I would be bullish (especially given Brian's bond-to-stock commentary), but play small or be hedged due to event risk. If you're an investor, I would not be bullish until the intermediate-term indicators line up properly or the market is struck cheap by an unprecedented improvement in the economic backdrop. Both are a distance away.
From my perch, I am soooo fried that I am taking tomorrow off. It is clearly time to take the foot off the pedal or I will be no use to the Kirlin Strategy Group's clients or you Minyans.
Have a great weekend folks!
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