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Saturday, July 31, 2010

Market Thought... don't know

Right now we are at a point at which the market can go either way. I see hints of bullishness via the VIX, as I still think it will break down from the 200 SMA. Also, the market acted well in the face of a declining 10-yr yield.

When I do a bottom-up analysis, I still see very inexpensive multi-nationals, and am waiting for the big boys to realize the IBMs of the world (ie GS, AAPL, MSFT, INTC etc) are not held hostage to the American economy, and are very much levered to the growth of the BRIC countries. Hence the stronger earnings. Larry Kudlow brought up a good point Friday with the GDP report, private sector investment spiked 22%. That is some really good news, which implies the +$1 TRILLION on company balance sheets is making its way into the system.

I did take action the other day with the decline of the names mentioned via my previous post. Although market action for the very short-term is cloudy, and may be hostage to the labor report on Friday, the market seems very inexpensive. (Here is an interesting read regarding market PE and valuation.)

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