Thursday Could Tell If Market's At Bottom
Natexis Bleichroder's John Roque says tomorrow's market action will tell the tale of Tuesday's big run up. Is the market bottoming, as many traders were quick to say as the Dow and financial stocks rocketed?
"I'd like to think yesterday would be more than a one day phenomena, but I'm also aware that you get the most vicious rallies in a bear market," said Roque, senior vice president and technical analyst. "We didn't make a new low today. Tomorrow will be a very important day if we're able to hold above Monday's lows," he said.
Roque said he's looking at a target on the upside of 1,330 on the S&P 500, where it closed yesterday. On the downside, if it can't hold 1,256, the next target down would be 1,236.
I spoke to Roque as the Dow was winding down to close with a 293 point loss today. "It could be that it's going to take more time to form (a bottom) and in the interim, it's just going to be difficult," he said.
Byron Wein, of Pequot Capital, appeared on "Closing Bell" Wednesday, just after the close. "I do think we're in a bottoming process...I said that on Monday," said Wein. "The market had a big rally yesterday. Obviously, it gave a lot of it back today, but I still view this as the market trying to find a bottom."
In that market scenario, "I think you want to own some of the things that were hurt the most today," he said. "I still think you will make money in energy, in materials, in a few technolgy stocks. I would still avoid financials. I still think there's trouble ahead there. I would avoid consumer staples. I think there's some money to be made in biotechnology, health care, but I think you have to be very selective. It's pretty much a stock by stock selection process."
Many of the stocks that took a beating Wednesday were dragged down by steep decline in commodities markets. energy and commodities were the worst performers. The S&P energy sector was down 5.4 percent and the materials sector was down 6.3 percent. Stocks like Exxon , Conoco ,Anadarko were down about five percent or more. Dow Chemcial , Monsanto , and Freeport McMoran Copper were all smacked.
"I think the market will bottom some time in the first half and do a little better in the second half, but I do think the economy will pretty much be in recession the whole year," Wein said.
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