Who knows exactly how things play out, but I don't expect to be significantly wrong on this one. The 1798 close is near where I think the market is capped (1800), and I think that we could back-fill just a little here. As I look to 2014, while I expect more of the same (slow economy with modest growth, a little PE expansion), I think that the low for 2014 will not be the first day of trading either. I dont see a huge amount of downside and expect that with about a 1740 close that I still project, 1600-2000 should constrain the trading next year, with a close of 1968 based on 16 PE.
As far as technicals, I can't find too much support for much of a pullback or for the rally to peter out. As far as when the market goes to "black 1" that will not be until . In terms of price momentum, SPY is 0.44, while IWM is just 0.13 after some recent underperformance. SPY won't possibly be black 1 until January.
This week, the watchlist ( Download Watchlist111513 ) had 78 names close above the 10dma, a little cautious. I should note 4 changes, with ATX, EGOV, HP and PLPC out and AEO, EPL, GWPH and PAY in. There were no 10% losers. GWPH, a biotech focused on cannabis-based therapeutics, soared (after my article perhaps), while PBI continues to make me look foolish for booking the gain and hoping to get back in. I underestimated how much this story would resonate with investors - not much changing there in terms of the numbers (just the valuation). Black 1s now number 13. 35%+ opportunities include the risky ANV and also EPL, PLCM, BCEI and AVP. VOLC dropped off. Oversold names include IRG and EZPW, while those more than 1 unit oversold would also include SWI, IIVI, EPL, AVP, DORM, CSCO and ANV. On the prospects, I would also point to LAYN, CTRX, and RTIX.
Here is the spreadsheet for the positions in the models ( Download Positionwatch111513 ). I updated a few targets.
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