Bolsas europeias regressam ao palco principal

[Ulisses Pereira]

Cada vez gosto mais da forma sensata e de mente aberta como o Rev Shark fala do mercado.

James "Rev Shark" De Porre

Morning Outlook
4/24/03 07:37 AM ET

"Sometimes I pause and sadly think
of all the things that might have been.
Of all the golden chances I let slip by,
And which never returned again.
It fills me with gloom when I ponder this,
Till I look on the other side.
How I might have been completely engulfed
by misfortune's surging tide."

-- G. J. Russell

The market has been quite impressive lately, with some of the healthiest action we have seen in some time. There even is talk about whether this may be the start of a new bull market. Despite the bullish behavior, there are quite a few folks who have sat in cash on the sidelines convinced that any strength was doomed to fail quickly and completely. We have been well conditioned by the bear market and it's tough to believe in rallies.

It's always easy after the fact to see all of the golden opportunities that we might have capitalized on, but the nice thing about the stock market is that there always is a new supply of opportunities. If you missed out on participating in the recent rally, don't beat yourself up over it but reflect on what you might do to better capitalize on the next batch of opportunities that comes along.

One of the first lessons that traders need to learn is how to keep an open mind. I've been hearing all sorts of reasons lately why this market shouldn't rally: valuation, volatility, too much bullishness, a lousy economy, etc. But the fact was that the technical pattern was clearly improving and earnings reports were generally better than expected. Even if you think the DJIA is going to 3000 there are times you have to open your mind and realize that a rally is in the cards. Perma-bears and bulls miss a lot of short-term opportunities when they become too emotionally tied to their viewpoints.

So let's set aside our biases and try to figure out where this market is going from here. We have had very good momentum and a break above some key resistance levels. Can the move continue? After the action of the last couple of days we are slightly extended and starting to run into the overhead resistance from January. The S&P 500 has a nice block of congestion back in January, which ranges from 909 up to a high of 935. We are at 919 right now so we are the middle of that resistance.

Given the degree of the recent move and the significance of that resistance it is going to be very tough for this market to continue upward without some sort of pullback or basing action. Plain and simple: we need a rest.

When we consider that the real driving force behind this move has been the better-than-expected earnings and that the catalyst is coming to an end, it makes sense that we may see some profit-taking. However, a rest and/or pullback doesn't necessarily mean that we are going to see a lot of great tradable opportunities to the downside. This market is clearly in an uptrend and we shouldn't be focusing on shorts until it is clear that the trend is turning back down.

In the early going we have a bit of profit-taking. European markets are soft, the dollar is weak, gold is rising and OPEC is expected to take action to bolster oil prices. We still have a steady flow of earnings reports and the tone remains good but the rosy glow of beating expectations is starting to wane. Also, the analysts seem to be getting aggressive with the downgrades again.

One new phenomenon that we have had to contend with over the past six months or so is the propensity of analysts to downgrade technically strong stocks. There is a tremendous increase in "valuation" downgrades recently. I assume it's a reaction to all the criticism from the bubble days but it sure takes the steam out of some pretty good looking stocks.

For example, I see education stocks being hit with a downgrade from JP Morgan. Back in the bubble days it would be raising the target price rather than cutting its rating. Analyst actions such as these are another reason why it's going to be tough for this market to keep running without some sort of rest. "

(in www.realmoney.com)