Episode 14: Market still in Correction, indexes remain below their 50 day moving average. Be patient, don’t buy dips yet.
How to Determine a Market Bottom? Use the Bill O’Neil Investor’s Business Daily (www.investors.com) method. Wait till at least the 4th day of recovery off a market bottom. Follow through days that confirm a market’s change in direction generally occur on the 4-7 days following a bottom.
European bond yields irrational. France @ 1.46%. Italy @ 2.8%. German’s stock market down 11% last week.
Long term trend- lower Oil prices. Will result in a lower cost for EVERYTHING…this price deflation will help spur the economy. All commodities will have a lower or stable price, including Gold. North Dakota’s oil production is about 70% of Iran, without the turmoil and drama…and without the cost of an army or navy to protect it.
Caterpillar will buy back 6.5% of their shares…will give illusion of earnings growth.
Corporate share buy backs in 2014 are averaging about 4%, this is used as balance sheet engineering to mask stagnant growth. During a recovery and an expanding economy, companies issue stocks (stock splits). Buy backs are a form of contractions, NOT growth.
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