View of the markets
Interview: Cybertrader--- Tower, Ken--- Analyst
>> Welcome back.let’s recap the day’s numbers with the big benchmark indexes. the dow, s&p and nasdaq, three red arrows. the dow and s&p down .5%, almost .6%. and the nasdaq the worst performer of them all, down 1.5% on the day. looking at the new york stock exchange volume, a little bit light, not the typical 1.3 billion shares and decliners outpacing risers. nasdaq volume also below average, under two billion. and the wilshire 5000 trading lower today. moving on to the fixed income market -- the dollar now buying more yen, a reversal since i last spoke. and the euro and pound trading lower against the dollar. that is across the board against for the greenback. stocks may have finished lower, but our next guest says we’re entering a period when cash flowing into the market usually increases and that may give stocks a boost before the end of the year. ken tower, chief market strategist at cybertrader, joining us from princeton to offer his view of the markets. it’s all about cash flow? is it that easy, mr. tower?
>> there’s an awful lot of supply and demand going into whether stock prices rise and fall and this is a more positive time of the year. mostly the market advances between october 31 and january 31. so, it’s a good time to be invested.
>> give me an idea of how much the market might advance during that period of time?
>> on average, it advances about 4% and during periods where the market’s not in a roaring bull market such as in the 1980’s and 1990’s, it advances even a little less than that, on average about 3%on so not a a barn-burner, although, going back to the 70’s, the last time the market went sideways for a long period of time, the election years had quite positive advances. all three of the election years during that flat time for the market overall had very nice advances from the end of october until january. so that’s where we are now. a small sample size, but bullish.
>> the dow and s&p have fallen four out of the past five days. year not worried about that?
>> not yet. this has been such a strong advance. the rate of advance has slowed down from early june on versus what it was from march until june. but it’s―i don’t want to use the energizer bunny as an example, but the rally keeps going and going. a few days down off the high you’re still above the one-month moving averages and above the three-month averages. everything made a new high intraday last week. there’s not much to be bearish about here.
>> if i look at the groups, ino tech up 43% year to date, consumer discretionary spending up year to date and at the bottom of the pile, telecom services and healthcare. will the laggards electric leaders and vice versa?
>> there will be a rotation. rotation is an element of the market. but the rotation probably doesn’t happen until we see a market correction. that’s typically when leadership changes in a bull market. it’s not a smooth hand-off of the baton the way a well-trained relay team works it. the baton of leadership gets dropped and kicked aroun around and there’s no sign of it yet. an awful lot of people are getting frustrated waiting for it. and it might come in a few months but it’s not here today.
>> ken, i didn’t get the memo on that correction. when exactly is that coming?
>> exactly! correction has been widely anticipated since june 6. so, again, this is a monster of a bull market. it is so strong, number one, because the market has correctly forecast the strong rebound in the economy and number two because an awful lot of investors missed the beginning of the rally, having been burned pretty badly in the previous couple of years, and now there’s this pool of money looking to get into the market every time it comes down a little bit, you see some of that money come back in and turn the market higher.
>> under a minute, i’ i’d like to get your sentiment in terms of the growing scandal in the investigation of the fund industry.what impact will that have?
>> it’s certainly not positive for the market and a tribute to the fact that this bull market is so strong, at least this phase of it is so strong that even given this bad news, the market can continue to rally. to the extent that people are pulling their money out of one fund and putting it in another, that’s at least short-term disruptive. i don’t think it’s really causing a lot of money to move out o of the equity markets but while it’s in transition, it’s coming out of somewhere into somewhere else.
>> is it a buying opportunity?
>> well, quite possibly. again, you have, typical for bad news to come out when the market is struggling and while this market isn’t down, it’s rising slowly. it’s quite possible that would go back to the election year pattern with a nice rally.
>> excellent information, ken tower, chief market strategist at cybertrader. coming up, we’ll look at asian chip stocks .
