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Tuesday, April 27, 2010

Elaine Garzarelli Bullish - New S&P500 Target

Elaine Garzarelli, President of Garzarelli Research, remains Bullish according to Dan Dorfman in his article "It's Still a Go-Go Market!" She remains bullish but sentiment suggests we could have a correction at any time.
Her overall view, as exemplified in a commentary she just fired off to clients: it's still a go-go market.
The chart below shows the S&P500 is currently at 1208.64 so reaching Elaine Garzarelli's target of 1315 would be a gain of 8.8%.

Sentiment is too bullish so a 4 to 7% correction now would not surprise her:
One of her indicators, though, a contrary indicator that focuses on sentiment, is flashing a distress signal. In brief, the number of bullish investment advisers has been rising steadily, a development that often precedes a market sell-off). Accordingly, Garzarelli says she wouldn't be surprised to see a consolidation or a normal 4% to 7% correction at any point. But such a correction, she observes, would be an opportunity for investors to add to their stock positions.
This contrary sentiment indicator she is talking about the Investors' Intelligence Bull Bear Survey. I track this in my newsletter and used it to buy equities in February when the market made its last correction then took some good profits last week when the sentiment indicator flashed "take profits." If the market pulls back enough to hit some of my newsletter "auto buy" levels then we will buy the shares back. My "Auto Buy Levels" are prices for limit orders my subscribers can set ahead of time with our broker so they execute during the day if price targets are reached.

Garzarelli's 2010 Targets - S&P500 to reach 1315
For all of 2010, Garzarelli expects a 28% increase in S&P 500 operating earnings, spurred by easy comparisons, company cost-cutting, recovering economies around the globe, low interest rates and low unit labor costs.

Her GDP outlook calls for 4% growth this year, which she thinks should enable the S&P 500 to realize its fair value of 1315 before year end. Such a showing would represent about an 8% gain from the index's current level of around 1217.
On Interest Rates
While fears of rising interest rates are mounting on Wall Street, Garzarelli pooh-poohs such concerns. She reckons that financial nervousness and lofty unemployment will likely keep the Federal Funds rate--now in a range of zero to 0.25%--stable at least till the summer.
Summer is only two months away.

Since 12/31/98 "Kirk's Newsletter Explore Portfolio" is UP 159% (a double plus another 59%!!) vs. the S&P500 UP a tiny 8.6% vs. NASDAQ UP a tiny 3.5% (All through 12/31/09)

In 2009, "Kirk's Newsletter Explore Portfolio" gained 33.5% vs. the DJIA up 18.8%
As of 4/25/10, the explore portfolio was up 11.1% YTD

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S&P500 Chart
click chart courtesy of stockcharts.com for full size image

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