About Me

Retired chief investment officer and former NYSE firm partner with 40 years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!

Thursday, October 06, 2005

Stock Market -- Technical

Well, my momentum and internal market supply / demand
measures continue to show a pattern of compression which
could extend up to another 2-3 weeks. I have avoided
trading since early August, since the extended compression
period has left me bereft of a sense of direction.

My guess is that to have a positive breakout from this
compression interval, we may need to see a rotational
change in leadership to groups that might benefit from
a weakening of oil and gas prices. The prevalent
psychology in the market is that the fuels sector has
advanced enough to damage profit margins for a broadening
array of companies, enough so that improving margins
for fuels producers will be more than offset by reduced
profitability for net fuels consumers. Players have also
been shading the market multiple to reflect expected
higher inflation readings near term. Thus a rekindling
of positive momentum of oil and gas prices and the
energy stock complex could produce a fuels led rally
that might not lead far at all, whereas as a rally
led by beneficiaries of lower fuels prices could be
explosive.

But first, let's get through the compression period.

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