Lange Financial Services. Brief Market Update. Valentines Day 2011. Remains Bullish

[ 1 ] February 14, 2011 |


Since the August-October rally that we predicted on the blog, the market has continued to defy the almost unanimous predictions for a correction of 5%-10%. During that rally, practically everyone was looking for the traditional September-October bottom. We turned bullish in early August and have maintained a very bullish, fully invested posture, while not being dissuaded by the prevailing correction sentiment. The DOW is now up approx. 25% since the August bottom.

While we concede that a correction of up to 3%- 5% is possible at any time, we would view such a decline as an opportunity to add to or initiate growth positions in quality stocks.

Our analysis of various technical indicators turned very positive in July-August, and has remained positive ever since. Our fundamental view was that confidence would replace uncertainty (GRIDLOCK) as we approached the election and would continue strengthen significantly thereafter. The economy , as we go through 2011, should continue to improve, accompanied by rising corporate profitability. The popular market indexes are selling at an valuation of only 13 times forward earnings projections, a very reasonable valuation compared with historical earnings/yields measurements. The lower the yield, the higher the price/ earnings multiple.

We continue to recommend adding to, or initiating quality position on any weakness.


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Category: Markets and Trading