Tuesday, March 10, 2009

Technician Jeff DeGraaf--we're extremely oversold

CNBC speaks with Jeff DeGraaf, ISI Head Of Technical Analysis Research:

Not since 1931 has the S&P been so far below its 200-moving day average, DeGraaf says, meaning the market is extremely oversold.

And new lows on the S&P has been contracting over the past several months, CNBC says, citing DeGraaf: "Even though we're 140 points below where we were in October, the number of stocks making those lows is about half. That's a bullish divergence."

Continuing, "These are good conditions but they don’t mean anything without a spark. On Tuesday we got the spark, DeGraaf says."

DeGraaf likes Sprint (S) and Morgan Stanley (MS).

Fool's Rally? Maybe

Market update:

Market's are up strongly in midday trading. A market bottom? Normally I'd expect a fool's rally, but yesterday, there seemed to be a flood of bad news, a sense of foreboding, and although I didn't post my thoughts here, there did seem to be a smell of a market bottom.

I'm still doubtful. The rally today is being led by financials. The problems in banking and insurance are not yet over.

Later update, 4 pm PT: Today's action saw relatively weak rallies in consumer goods, healthcare, some tech sectors, Asia and large-cap growth--all areas where I would expect market leadership to come from. Commodities made little headyway as well, with materials being an exception (but not by much). Bottom line: Doesn't look like a rally yet.

John Authers of the FT captures the mood today, writing about the lack of confidence yesterday. (sub required)

Grantham: "Invest when terrified"

Money manager Jeremey Grantham on how to invest when you're terrified. He suggests moving in with large chunks of money.