recovery

For Active Traders, 2010 Can’t Come Soon Enough

According to a recent online survey of more than 270 retail investors conducted by online broker TradeKing, most investors are writing off hopes of a recovery this year and looking to 2010 for relief.

In the survey conducted during the last week in October 2009, 47 percent of investors described their market outlook as “neutral” or “not sure,” which are among the highest levels reported since the survey’s inception in July 2007. Accordingly, most of those surveyed maintain a skeptical view of the Obama administration’s handling of financial market matters, with more than 62 percent of respondents saying the administration’s policies either make them feel “less confident in the market” or had “no effect at all” on their market confidence, up two percentage points from last quarter.

“One thing is certain: uncertainty dominates right now,” said Don Montanaro, Chairman and CEO of TradeKing. “We see at TradeKing how investors’ bullishness comes in the form of very specific moment-in-time opportunities, but the overall sense is that the market could go either way on any given day until we see some solid trending data signaling long-term recovery.”

Unemployment Remains #1 Trade Trigger for Second Consecutive Quarter

U.S. Unemployment Claims held fast as the top trade trigger for both equities and options traders, with 41 percent of respondents pointing to this issue as their primary concern. U.S. Housing, Consumer Spending and Interest Rates all tied for second at 30 percent. These concerns knocked Quarterly Earnings from its #2 spot last quarter, falling sharply from 36 percent to 27 percent in this most recent survey.

Energy and Technology Sectors Have Moved Up Sharply As Top Long Opportunities for Equities and Options Traders

For the sixth straight quarter, Energy remained the favorite sector for both equities and options traders as having the greatest potential for success in a long position for the coming quarter, followed closely by Technology.

• 58 percent of total respondents selected Energy as their top long play in the coming quarter, up from 49 percent in July. It was followed by Technology at 47 percent, which rose from 34 percent just three months ago.

From a short position, Transportation and Travel took top spot for the second consecutive quarter, followed by Finance and Retail as the most promising short plays.

• Transportation and Travel was selected by 24 percent of the respondents for the top overall sector to short, up from 19 percent last quarter. Finance took second at 23 percent and Retail came in third at 21 percent.

recovery

Ready to Stick a Fork in the Recession?

Yep, it’s done, according to at least one economist (though the culinary reference is just making me hungry this morning). CNN Money says that economist Dennis Gartman, who told everyone the recession started back in fall of 2007, a full year before it was officially declared to have started then, says that signs he looks for suggest that the recession ended about two weeks ago.

In fairness, his methods are not typical. He describes how he looks at jobless claims as “like the definition of pornography: I’ll know it when I see it.” But he’s been right a lot. Sure we still worry about spiking commodity prices and the possibility of inflation. But it doesn’t look like the Fed has any interest in raising interest rates at this point, which is good. But there is this nagging fear that we have gone from such low depths to such a rapid recovery in such a short time, and that makes some people nervous. And yes, at some point that stimulus is going to run the risk of over-heating the economy a little too fast.

Most market watchers I know think the stock market will hit another trough at some point in the next few months. After running up 50% since March and now showing a 6% increase for the full year, some profit-taking will probably happen.

But back to the economy – the more people say things are getting better the more people will believe it, and consumer expectations will hopefully improve (consumer confidence has still not been the greatest lately).

When I set up this blog, I vowed to myself that we might change the name at some point when things are doing better (ideas for names guys?). There’s a restaurant in Manhattan that changes its name for each season of the year. Anyway, I’m not quite ready to do that, but I actually thought about it for the first time since we launched in March. Groovy, eh?