Important Market And Trading Update After The Decline. Lange Financial Services Comments. Low’s In? Bullish

[ 0 ] March 15, 2011 |

We believe this update received earlier this evening is a valuable read for traders and investors.   We also apologize for not posting as much recently as we have had server issues.  We are now on a new and more reliable server!



During the past month the market has been confronted by several strong headwinds including:

1. The Political Crisis in the Middle East
2. Downgrade of Spanish Debt
3. The Headlines of an Economic Slowdown in China
4. The Japan Earthquake, concurrent Tsunami, and possibility of a Nuclear Meltdown

Throughout these extremely negative events the stock market has held up extremely well. In Mid February 2011, we posted on the site that the market was vulnerable for a pullback or correction from the advance enjoyed since last summer. We anticipated a pullback of about 3 to 5 percent. At today’s low the correction in the DJIA was about 6% while other indexes exceeded 10% before the late reversal today when the DJIA rallied 160 points from the lows and other indexes rallied as much as 50 to 60 percent from their intra-days lows as well. Considering the gravity of the recent unfortunate events in Japan, the pullback ( decline of up to 5%) became a correction ( more than 5%) and still very close to what we were predicting. .

We believe that the lows reached today have possibly marked the end of the month long decline. We can not predict mother nature and catastrophic events, and are not experts in Nuclear technology, but if the situation becomes more stable in Japan with factual information on the issues they are facing replacing the rampant media speculation expounding on the negatives, then we will be even more comfortable that the lows have been reached and or are very close to being so. There has been nothing major that has changed on our fundamental views on the stocks we favor or the earnings targets we are projecting for the markets. Comments from the Federal Reserve Meeting today were also positive.

The market is only selling at 13 times this year’s earnings of about $100 for the S&P 500 and approximately 12 times 2012 tenative projections of $110. The world wide economy continues to strengthen with current forecasts likely to be exceeded in many instances.

We retain our bullish posture of the last seven months and look for higher equity prices in the months ahead once the aforementioned global factors come into better focus. Selectivity is expected to become increasingly important as the bull market matures. Our long standing policy has been to accumulate growth, or statistically cheap equities during periods of weakness. This view still stands.

While uncertainties remain regarding the price of crude oil, a modest global economic slowdown, continuing Mid East uncertainties, and the impact of the disaster in Japan, we believe that many stocks are now attactively priced. Some of our favored stocks at current levels we believe should be further accumulated include:

Peabody ( BTU)
Walters Energy ( WLT )
Cliffs Natural ( CLF )
McDonalds ( MCD )
Alpha Natural ( ANR )
3M ( MMM)
MetLife ( MET )

For a list of more of our favored stocks mentioned previously on the site please click here.

See the Trading Guideposts on the site’s homepage for our investment and trading philosophy. Simply put, you buy stocks for one reason, so that you can sell them at hopefully at higher prices. We will be adding to the Trading Guideposts section in the near future with updated comments to aid traders and investors to achieve their investment objectives in these volatile markets.

Fred and Rob Lange, Lange Financial Services.


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Category: Economics, Markets and Trading, Technology