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Wednesday, October 26, 2011

a scary chart, for a bear

Today's intra day chart of GS would scare the crap out of me if I were a bear.

One aspect of why the market is allowed to trade at a lower multiple (trailing PE of 14) is the drag the financials have had on the market. Yesterday's Case-Shiller numbers was a wake up call, that housing will no longer be a drag on the market, however it got masked in the crazy market movement.

Today, I find the absolute strength in GS very interesting.  Keep in mind, GS was rallying before 1:30, when the EU/China news sparked a market run.  With the support from the banks, the SP500 may be able to trade with a normal level of 15 or so.

A market multiple of 15, would suggest individual names would see market multiple expansion to more normal levels, from their currently depressed multiples.  Which means there are a ton of inexpensive stocks out there.

Anyone who doesn't like buying after a huge run, look to names like DD or ETN.  They still offer a nice dividend with appreciation capabilities toward the end of the year.

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