The Week Ahead

While I’m eating my crow I thought I would share someone else’s  market view for a change. The following is an excerpt from “The Growth Stock Wire”, a newsletter that I receive daily. It mirrors my opinion of the market, at the moment. You can find more info from them at http://www.growthstockwire.com.

“To expect anything more out of stocks overall, you must make a strong case for earnings growth. That’s hard to do with banks failing, unemployment pushing 10%, and the largest debt market in the world – the U.S. residential mortgage market – in the middle innings of a once-a-century meltdown. People who don’t have jobs and can’t pay mortgages spend less than people with jobs who can afford to live in their houses. With housing in charge of the economy now, more unemployment means a worse outlook for corporate earnings and stocks in general.”

“Stocks were cheap in March. But since then, they’ve risen nearly 40%. They’re no longer cheap, so you shouldn’t be too eager to follow the trend.”

“Standard & Poor’s 2009 earnings estimate for the S&P 500 is $55.61. At 882, the S&P 500 is trading around 15.9 times 2009 earnings. The index’s long-term average, a reasonable proxy for its fair value, is 16 times earnings.”

I couldn’t put it better myself.

This week  the market may take a breather after last weeks charge ahead. I’ll be  in Los Angeles for a few days, so you may not hear from me until Wednesday or Thursday. Until then, Happy Trading!

Michael