Euro-unity at last!
by Peter Switzer
Last night Lance Lai, my champion of charts, showed how the technicals were pointing to more challenging days ahead. However, I asked whether a psychologically very positive development could make a monkey out of the charts’ predictions.
Lai categorically said 'yes' and we saw something like that overnight when the French and German leaders stood behind the Greek PM and their resolve to avoid Greece defaulting. Stocks were up more than two per cent at one stage and this is what the market needs to combat the excessive negativity we’re seeing right now.
I’m not saying that valuations were too high in the short-run, but I am insisting that on a long-run basis many great companies are oversold.
For the record, the Dow ended 140.88 points, or 1.27 per cent, higher to 11,246.73 and the S&P 500 put on 15.81 points, or 1.35 per cent, to 1188.68.
The European solidarity and comments from the Chinese leader that his country is interested in investing in Europe all helped stocks go higher.
This wasn’t a bad effort given the fact Moody’s cut the credit ratings for Credit Agricole and Societe Generale because of exposure to Greece.
In the USA, retail sales in August stayed the same though economists expected a 0.2 per cent rise, but tomorrow there’s a decent economic show-and-tell story with the Yanks getting inflation, manufacturing, industrial production, consumer sentiment and the closely watched Philadelphia Fed survey.
I’m expecting more ups and downs over September and October with Euro-debt and US economic issues taking centre stage. If both of these stories start to tend towards the better news side, which I expect, then I reckon we will come to see that there are a lot of companies now at historically good prices.
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Published on: Thursday, September 15, 2011
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