"Market Monitor"-Stan Weinstein, Editor of the "Global Trend Alert"
Friday, November 20, 2009PAUL KANGAS: My guest "Market Monitor" this week is Stan Weinstein, editor and publisher of the "Global Trend Alert," a financial advisory service for institutional investors. Welcome back to this program. Pleased to have you.
STAN WEINSTEIN, EDITOR & PUBLISHER, "GLOBAL TREND ALERT": Always a pleasure Paul.
KANGAS: You've always said that it's not the news, but how the markets react to the news that really matters. So the economic fundamentals are a little on the shaky ground, why the big rally since March?
WEINSTEIN: You put it very well. That's what I wrote my book. Once the news no longer took the market down, you saw January, February, really crashing. In March, the news was still bad. Market didn't go down any more. That was a bell ringing. Then in addition, you take a look at the number of stocks hitting new lows. In October 2008, you had almost 3,000 stocks hitting new lows. You made a new low in the market. When you dropped down to 6500 in March, you only had 800 plus new lows, that was another bell ringer. It's supply and demand. We've been going up since.
KANGAS: Yes, that's right. But where are we in the market cycle?
WEINSTEIN: I think we're now in the later innings of this bull market. It's not over yet but I definitely see signs that we're now in at least the seventh inning of this bull market. We have to be a bit more cautious here.
KANGAS: What's the best investment strategy under these market conditions Stan?
WEINSTEIN: I think it's important to realize that what we've seen before, once you get in the late innings, one, it's more likely going to be moves to quality. I see that happening already. Take a look. Which average made a new high this week? It was the Dow. Which average lagged? It was the Russell 2000 which is more speculative stocks. So you want to move toward quality stocks. I see them going there, big name stocks like a Merck here. Those are the kind of stocks they're going to and a lot of the speculative stocks, which originally led the rally, they're starting to lag now. We have to be much more careful there.
KANGAS: What other groups look for good gains, where we find good gains coming?
WEINSTEIN: I think you want to be looking still, I like the industrials, a lot of industrial stocks are very good. The metals look good, even the near term correcting. The pharmaceuticals, rotating to pharmaceuticals, good area. Just as important, you have to avoid certain places. I see a lot of restaurants making big tops. You want to avoid the restaurant stocks. A lot of buyer technology is not great. Steel stocks not great. I think it's so important to be selective here.
KANGAS: You liked on your last visit the banks and the airlines. The bank have done extremely well. Are you out of them now?
WEINSTEIN: I think the banks -- there's always exceptions. But in general I think the banks are starting to roll over. Not short sales, reducing banks going to places that I just told you.
KANGAS: Are there any special investing tactics you'd use at this stage?
WEINSTEIN: I think so. When you get this late into the cycle, one as I said earlier, you want to do quality stocks. I think that is important. Two, I think it's important that everybody learns to use stop loss orders, but properly placed. Don't just say 15 or 10 percent below where you are now. If you place them under moving averages, if you place them under prior important support levels, that will stop when it turns down. You're getting killed when the market turns against us.
KANGAS: What about gold and the gold stocks?
WEINSTEIN: First of all, the bullion, I'm sure you're saying yourself, has done much better than the gold stocks. Bullion's at another new all-time high. The stocks OK, but they haven't gone to new highs, at least the indexes haven't. Here is even though gold is temporarily extended here is where I think the fundamentals and technicals come together. The technicals are great. The fundamentals with this government spending like crazy, we're going to have inflation I think that you want to buy all collections in billion.
KANGAS: OK. How about bonds at this level?
WEINSTEIN: I'm kind of neutral on bonds. I would say in general you should buy shorter-term maturities and definitely higher quality issues.
KANGAS: Are there any foreign markets out there that you like, maybe even better than our own markets here at home?
WEINSTEIN: Yeah. I think that there two we have to be very selective Paul. If you take a look, Hong Kong looks good, Singapore also looks very interesting. Conversely I wouldn't want to go invest in Japan. Japan looks to me like it's rolling over. I'm not thrilled with the way the Japanese market looks.
KANGAS: We have about 30 seconds left. Any last minute thoughts that you can give our viewers?
WEINSTEIN: I think that what we've been through the past two years is unbelievable, we should all learn from it. To just have the simple buy and hold strategy can be very, very dangerous, investing health and wealth. So I think it's almost biblical, there's a time to sow and a time to reap, a time to buy, a time to sell . We all have to get a sense of trading and technicals can help you here.
KANGAS: In other words, don't lock them in a box and keep them there.
WEINSTEIN: Couldn't say it better myself Paul.
KANGAS: OK. I want to thank you once again for sharing your insights with us, Stan.
WEINSTEIN: Always my pleasure.
KANGAS: My guest, Stan Weinstein of "Global Trend Alert."
