Daily Investment Interpretations

January 8, 2010

2010-1-8: All three indices rose again today, with the NASDAQ Composite pole-vaulting, to more than offset yesterday's slight decline. The indices continue to rise in stealth mode. The NASDAQ Composite climbed 17.12 points, (0.74%) to close at 2,317.17, the Dow added 11.33 points (0.11%) to close at 10,618.19, and the S&P 500 rose 3.29 points (`0.29%) to 1,144.98. Oil gain a little to $82.75 a barrel. Gold closed up at $1,139. The VIX fell 0.93 to 18.13.
   
Today's job report was a shocker, with 85,000 jobs lost instead of the hoped-for few-thousand jobs added: U.S. payrolls shed 85,000 jobs To add to the concerns, U. S. investors set a new record in paying down credit card debt: U.S. consumer credit down record $17.49 bln. As commendable as this is for long-term consumer financial strength, short-term, it's a dagger aimed at the heart of the economic recovery. The financial news is starting to get pessimistic
   
I'm going to rerun yesterday's interview with Bob Doll because of its significance.
 


    "Some pivotally important news: here is a set of predictions by a prophet with an outstanding track record in forecasting market trends: the chief investment officer of the Blackrock hedge fund, Bob Doll. I've taken this list from one of my favorite investment newsletters (along with the Cabot China and Emerging Markets Newsletter): TopStock Portfolios. Of course, no one can be 100% right when it comes to "playing" the stock market, but I'm quite impressed with the savvy and the solid judgment exhibited by David Moenning and his associates.
    " Anyway, here's the set of predictions:
(1) The economy should grow 3%-3.5% this year... i. e. this won't be a double-dip recession.
(2) Job growth will turn positive, but unemployment will remain high for several years.
(3) Earnings should rise about 30% to $80 a share, suggesting a stock market that could sustain a return to 2007 highs.
(4) With worldwide excess capacity and high unemployment, inflation won't reappear this year,
(5) Although the Federal Reserve may not raise its rates, interest rates will rise across the board.
(6) We haven't had a 10%-or-greater correction since the March 6th, 2009, low. We can probably expect one or two such corrections this year.
(7) Emerging markets will continue to outperform.
(8) Health care, technology, and telecommunications are good investment areas.
(9) Mergers and acquisitions will accelerate.
(10) Democrats will continue to control Congress. (Of course, Democrats will automatically continue to control Congress through 2010, since there will be no actual changes in Congress until January 2, 2011.)

    " What's important to me about this is the conclusion that there won't be a double-dip recession in 2010. Of course, I'll automatically sell if the market heads south, but this forecast helps take the chill off the worst recession since The Great Depression. I'll be taking a more-aggressive stance moving forward. Specifically, I'll be investing more in long-term, deep-in-the-money (conservative) call options on index exchange-traded funds (ETFs). What calls? Well, the Nasdaq Composite ETF QQQ has a $30 January, 2011, call option, -ZVXAD, that might be of interest.
    " I'll write more about this over the weekend..
    " Tomorrow morning comes the big jobs report.

    "At long last, payrolls may gain."


    Unfortunately, payrolls didn't gain.
   The current uptick is getting ripe for at least a modest pullback. It probably makes sense to wait for that before buying.
    Here are Ten investment ideas for 2010.