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Show Stock Forecast "Be Patient, Don't Panic!" The stock market has been in a correction for the past three weeks and despite the sharp declines in a number of stocks and generally boring action of the broad market, we remain very bullish long term. Unfortunately, our short to intermediate term outlook-1 to 2 months-remains cautious out of respect for market action. Rally attempts have been a very puny image of what they had been as institutions are now more interested in protecting profits than in making new commitments. The bullish interest rate and inflation scenarios are no longer stimulating the buyers which means we probably need both a continued correction of excesses as well as something new down the road to turn the buyers on again. The majority seems to be projecting a quick drop down to the dow 925-950 range and then a resumption of the bull. Some contrarians now look for a much bigger drop because they feel too many are too comfortable with this modest down then right back up posture. In our opinion, the three month history setting advance must be corrected but we believe the substantial amount of sidelined cash and the still intact long term bullish arguments provide a safety net under the market. We believe stocks will correct by churning for a month or two in perhaps a dow 950-1000 range, punctuated by some short-lived selling squalls, which would combine to bring back the pessimism needed to restart the bull. Lower prices and increased bearishness could start a new upleg on their own but to make it sustainable, we will have to see an increase in confidence about the when and how much of an economic recovery. The news now indicates that the economy has probably bottomed but gives little . encouragement about the recovery. Such evidence may be several months off which fits our projection for this correction. A possible cut in oil prices is receiving a lot of attention and differences of opinion as to what it would mean. In our opinion, it would deal the still lingering inflation fears a knock-out punch and help worldwide economies recover more than it would hurt by increasing the risk of debt default by oil producing nations. After some initial confusion and selling, an oil price cut could be just what this bull market needs. Provided by: Ben Ivey, Investment Broker, A.G. Edwards & Sons, 175 So. West Temple, Salt Lake City, Utah 84101. Phone 521-7660 ft , |