FYI | Jan 15 2008
By Rudi Filapek-Vandyck
It would seem that last night’s bounce in US shares might mark the low point in this November-January correction, at least that’s one conclusion that can be drawn from the fact that market watchers have dared to put their heads on the block arguing US shares were due for a rally back up from what seemed like oversold share price levels.
Among these experts are US strategists at BCA Research who argued yesterday (before the subsequent rally on US stock markets) that US equity valuations had become attractive again while technical analysis was suggesting there was limited downside from Monday’s closing levels.
BCA also points out that bullish investor sentiment seemed to have collapsed to a cyclical low adding this is often a good sign from a contrarian point of view. The strategists also remark that corporate insiders are buying aggressively, another positive sign (albeit an early one, they add).
Investors should not draw the conclusion that it’s all over from here, however, with BCA emphasising equities will continue to face near-term headwinds.
In the US, BCA likes in particular Health Care stocks.