The Week ahead

Optimism

I'm even more optimistic this week. After a personal pummeling on Dell Computer, Fidelity not letting me invest IRA funds in a great real estate deal, the market must carry me. There reason for my optimism, simple. Take a look at our latest model figures.

Our models show the S&P 500 appears to be undervalued by around 25%. This means they are predicting an unprecedented bull market. These numbers haven't been this strong since October of 1998. The economy is strong and all the presidential candidates from the major parties appear sane.

When I can hardly think of a reason for stocks to drop, I use a checklist. What can go wrong.

The Federal Reserve meets next week. If they raise interest rates, the market will undergo a surprised tumble. The smoke signals from the Greenspan teepee seem to indicate no change. Economic reports have been a little inconsistent, but not enough evidence to justify a rate move. Treasury bonds are below 6%. This means the market expects no changes.

What else can go wrong? The economic calendar is light. July Durable goods data and GDP data, due late in the week could shake things up, but those things happen AFTER the fed is done.

In my opinion, the fed moves now or does nothing until after the election.

Here's for a slowly rising market and no surprises.

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Shmuel Protter
investmenttool.com