Tonights IBD Meetup agenda /New Organizer/market environment/
Tuesday, May 25, 2010 9:42 AM
Stephanie has now turned over the responsibilities for organizing this meetup to me. I don't plan to do it all alone but more on that a t a later date.
Stephanie is on her way to her next travel adventure in 2 weeks, but we will see her as a participant/memeber at some future meetings. Than you Stephanie for all your years of service to the group.
I hope you members will contact Stephanie with your thanks as well. Just find her membership listing on the groups website and send an e-mail.
Tuesday(tonights) nights agenda will include a market report and discussion, some portfolio management tips given the current market and some stocks that are either ?holding up? , have broken down or worthy of watching their action when a new market rally is confirmed. Please note the following points in advance of the meeting-
After the IBD distribution day count forced us to recognize that the recent market rally was ?Under Pressure? on 4/28, the action of the IBD leader stocks by 05/04 called for IBD to push the outlook into ?Market In Correction?. According to IBD Trading Rules, one should not try to buy growth stocks now but wait for ?Confirmation? of a new market ?Rally? by a Follow-through Day (FTD). We can review those concepts as necessary at the meeting. However, as IBD advises in their material and each daily Market Wrap video, in this market environment, now is a good time to search for good quality stocks that could lead the next rally for your watch list.
Those of you who follow the financial news know that the catalyst for this correction came from the ?sovereign debt? banking crisis in Europe. It gives us similar risks to the world financial capital markets that the US banking/mortgage security crisis produced in 2008. Watch for the following risks-
--LIBOR is rising-interbank lending could freeze up as it did in the Fall of 2008
-- European policies designed to stabilize their currency and hold up the value of debt securities held by European banks could slow world growth
Slower world growth threatens the economic recovery and raises the risk of a ?double dip? recession
A major blunder by European policy makers or an unknown booby trap in the European financial markets could derail the promising economic indicators in the US economy
As those of you who attend regularly know, I have been expecting a market environment similar to[masked] following the[masked] bear market and 2003 bull. The capital markets
charts from March 2009 to April 2010 show a V shaped recovery which is only predicting but not guaranteeing a V shaped recovery for the economy. IBD research reports that such a rebound is similar to others in the biggest bear markets. Those with a[masked]% snap back from bear market lows had significant corrections following the rebounds but then followed by a smaller but significant second leg up. The average follow-up correction was 21% with a median of 19%. The second leg up following the big bear was a median gain of 27%.