Wall Street Greek

Editor's Picks | Energy | Market Outlook | Gold | Real Estate | Stocks | Politics
Wall Street, Greek

The Wall Street Greek blog is the sexy & syndicated financial securities markets publication of former Senior Equity Analyst Markos N. Kaminis. Our stock market blog reaches reputable publishers & private networks and is an unbiased, independent Wall Street research resource on the economy, stocks, gold & currency, energy & oil, real estate and more. Wall Street & Greece should be as honest, dependable and passionate as The Greek.


Seeking Alpha

Saturday, May 22, 2010

Assessing the Stock Market Mess

assessing stock market mess
With all the mayhem last week, we thought we would assess the stock market mess for you today.

"The Greek" earned clients a 23% average annual return over five years as a stock analyst on Wall Street. While writing for Wall Street Greek and others, he presciently predicted the financial crisis and housing and banking failures of the Great Recession. Visit the front pages of Wall Street Greek now to see our current coverage of business news, global financial markets, real estate, shipping, fine art, technical analysis and global affairs.

Assessing the Stock Market Mess



stock market messFor many passive market followers, the stock market mess last week came as a surprise, but not for Wall Street Greek blog readers. Over past weeks, I have noted the "Holy Resurrection" of an economic recovery, both on these pages and at the daily blog. We have reviewed the many flaws in the supposed improvement. We have discussed the pace of manufacturing recovery, and also its relation to bare bones levels of activity that the growth is being compared against. We have talked about the government crutches supporting economic stability, and have openly wondered if the hobbled economy could still stand once those crutches were pulled away. We have noted the ongoing weakness in the real estate market, and we have duly warned about the incessant bleeding of the labor market. We said a jobless recovery is neither a recovery now nor a sustainable state of affairs. And last week, our technical analyst, Steven Ferguson, with his intricate algorithmic equations and colorful charts, described brilliantly the precipice we stood upon. He warned days before it all went down that something special seemed likely to occur, something ugly… and then it did.

While the Dow gained 1.25% Friday, most of which came in the last few minutes of trading, the broadly followed index lost 4.0% through the week's stock market mess. The Dow Jones Industrials Index is off 9.0% since its April 26 close, as investors reassess the state of global affairs. European unraveling, while a net positive for investment capital fund flows into the US, now has the global investment community reconsidering sovereign risk, global currency valuation and global economic forecasts. Still, the flow of funds into US investments is up sharply, as seen by March's Treasury International Capital Report (TIC) posted recently.

We explained at the blog over recent weeks that the stock market seemed overbought. Put/Call ratios indicated investors were overly bullish, and hedge funds were too far long versus short. Also, investor advisor sentiment was mighty cheery. These were all signs of a stock market vulnerable to a decline should the right catalyst come along. In the end, it seems a confluence of catalysts combined with a "fat finger" gave birth to the latest bearish trade. The factors weighing included heavy austerity measures being implemented in Greece, Spain and Portugal, and rising concerns about a need for similar actions in Ireland, the U.K. and France. Meanwhile, chatter has steadily increased about China risk, and the expanding asset bubbles across the Pacific. Side stories including the ash cloud effects on European and global business, as well as the Gulf of Mexico oil spill's long-term impact on exploration and short-term hit to fisheries did not help the situation.

Basically, the sustainability of global economic recovery is in question. In the US, 9.9% unemployment weighs on the economy, and last Tuesday's data produced a 25K increase in weekly jobless claims to 471K. Manufacturing activity, while still reported expanding, saw a slowdown in pace, based on New York and Philadelphia area surveys. While oil prices fell on a strengthening dollar and global demand concerns, futures contracts a few months out showed no sign of softening. These factors weighed on stocks, and our technical analyst saw something in the trends. Ferguson views 900 on the S&P 500 Index a real possibility, and that mark is 17.3% lower than the index's current value at 1087.69. Now that would be a real stock market mess.

stock market forum message board chat rooms

Article should interest investors in NYSE: GLD, NYSE: XLE, NYSE: XLF, NYSE: BJV, NYSE: SZI, NYSE: BPD, NYSE: IEL, NYSE: PBN, NYSE: CGW, NYSE: LVL, NYSE: FRI, NYSE: PBP, NYSE: RSU, NYSE: RMM, NYSE: REA, NYSE: RFL, NYSE: RHM, NYSE: RTG, NYSE: RSW, NYSE: RMS, NYSE: REC, Nasdaq: PDOWX, Nasdaq: XDPOX, Nasdaq: XDPDX, Nasdaq: NDUAX, Nasdaq: NDUBX, Nasdaq: IDJAX, Nasdaq: NJCRX, Nasdaq: UDPIX, Nasdaq: UDPSX, Nasdaq: UWPIX, Nasdaq: RYLDX, Nasdaq: RYIDX, Nasdaq: RYCWX, Nasdaq: ONEQ, Nasdaq: QCLN, Nasdaq: QQEW, Nasdaq: QQXT, Nasdaq: QTEC, Nasdaq: NASDX, Nasdaq: NDXKX, Nasdaq: POTCX, Nasdaq: DXQSX, Nasdaq: DXQLX, Nasdaq: FNCMX, Nasdaq: INQAX, Nasdaq: MOTAX, Nasdaq: XQQQX, NYSE: NYX, Nasdaq: NDAQ, NYSE: ICE, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD)

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

twitter stocks

free email financial newsletter Bookmark and Share

2 Comments:

Anonymous Gray, Germany said...

Not good news, but at least a good explanation of what is going on. Only transparency can help investors to make the right decisions. Thx for providing this, Marcos!

8:01 AM  
Anonymous Gray, Germany said...

Btw, "the expanding asset bubbles across the Pacific" - how about the imploding asset bubbles across the Atlantic? A recent Spiegel story about the tourism crisis in Greece gives food for thought (German language only):
http://www.spiegel.de/politik/ausland/0,1518,696144,00.html

Hotel bookings in Greece are declining, about 30% less visitors this year. As a consequences, most hotel owners are trapped in a liquidity crisis. Many already have had enough, and want to bail out of business. There are 400 Hotels with a market value of 2,5 billion Euro for sale already (Kathimerini says, 900 worth 5 billions), 81 in the Ionic Islands, 48 in Rhodos, 50 in the Cyclades, 44 in Crete. Some examples from Crete mentioned in the Spiegel story:

Matala, apartment building, 11 rooms, 2 studios - € 500,000

Matala, Hotel "Xenophon" (they should get rid of that xenophobic sounding name asap!), 21 rooms, swimming pool - €800,000

Agia Galini, Hotel "Andromeda", 32 rooms, swimming pool on the top floor, €800,000

Agia Galini, Hotel "Harikilia", 10 rooms, seaview, €550,000

Agia Galini, Hotel "Ostria", ?? rooms, quiet location, €700,000

Agia Galini, Hotel "Petra", ?? rooms, roof deck, pizza restaurant, €970,000

Sounds like lots of interesting offers, and because of the already high inventary, prices are falling. Shouldn't afluent Greek American real estate investors be interested in picking the cherries out of this basket, using this year to renovate the properties, and be ready for a comeback of tourism in 2011? I'm not an investment pundit, but in my common sense opinion, regarding the strong dollar at the moment, investors should at least take a good look at such opportunities in Greece now.

9:53 AM  

Post a Comment

<< Home