Leeb's Market Forecast

Leeb's Market Forecast
April 10, 2008

Dear Investor, Below is the most recent Market Forecast update. To ensure that you continue to receive our timely market emails, please add us to your address book or safe list. Leeb ETF Trader Update   Market Recap:   Yesterday was the lowest volume day of the year. People are skittish to trade, and when they do trade, they do it in small quantities. This is the case as the market has entered earnings season and it is profits that will be driving share prices in the near term.   In bull markets, stocks shake out bad news and keep going. If the market is weak, bad news receives disproportionate attention. The reaction to the news will tell the tale about the willingness of this market to move out of its trading range. So far we see sellers appear just under 1400 on the S&P 500 and buyers appear near the January and March lows. And there's little rhyme or reason behind the week-to-week performances in different sectors. One week it may be financials, the other week it may be energy leading the way.   One economic number that has high potential to be a market mover is the weekly unemployment claims, which comes out every Thursday morning. No one pays attention to weekly unemployment claims in a strong economy as they thread around 300K for most of the time and are generally ignored as an indicator. But when claims rise above 400K people start paying attention. We saw weekly unemployment claims rise to 407K last week, the highest level since just after Hurricane Katrina. The market fears weak jobless claims numbers tomorrow, which is one reason for the buyers strike in stocks and the strength in bonds. The other reason being crude oil futures hitting an all-time high today. Gold is acting very well too.   We've just begun reading George Soros' new book -- "The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means" -- and we have so far found that George shares our negativity on bonds. The secular decline in the dollar will add inflation pressures over time and the bull market in commodities certainly does not help. Soros thinks that the bond market will respond to inflationary pressures quite negatively and the signal will be when long-term bound yield begin to rise as the Fed is lowering interest rates, i.e. when the Fed is helpless in manipulating bond yields lower.   Right now, both the fed funds rate and the 10-year Treasury note actually yield far less than the prevailing inflation rate. And that prevailing inflation rate is probably understated given the deliberate reformulation of the CPI index that has happened over time.   Still, bonds have refused to tumble despite all odds. We think they will, and when they do, it will be a big move. It is expected that the government's soon-to-be mailed rebate checks, along with massive growth in money supply, will stabilize the economy and actually help it grow in the second half. In recent memory, the Federal Reserve has been as aggressive with monetary policy on only one other occasion, after the 9/11 attacks. The economy surely came out of recession, even though the market took a while to put in a firm bottom. The turnaround may develop faster this time.   Until Next Time,             Your ETF Trader Team   Advertisement -------------------------------------   Leeb's ETF Trader   A Trading Advisory Service For Active Investors   Designed for well-capitalized investors with high risk tolerance seeking  ...   The potentially higher capital gains consistent with short-term trading. A better way to target sectors experiencing above average growth. A way to seek positive returns even in flat or sideways markets.   Leeb's ETF Trader offers investors a sophisticated short-term trading strategy that is easy to follow, requires only a few minutes a week, and features on-going support from a team of professional analysts.   Are You Ready For The Next Level Of Active Investing?                            Leeb’s ETF Trader   -------------------------------------   Leeb Aggressive Trader Update   Market Recap:   Last week we said that without a doubt more financial institutions would take write-offs before the credit crunch comes to an end. This week Seattle-based lender Washington Mutual answered the call by reaffirming a $1.1 billion ($1.40 a share) first-quarter loss, along with its raising $7 billion in capital to sure up its balance sheet. Expect others to follow suit now that the quarterly earnings season has gotten under way.     The key takeaway from the WaMu announcement is that, as with Lehman and Merrill (and so many others in the group), bad news is being greeted by investors with at worst indifference and more often than not with buying. The market, always forward looking, has likely discounted all the troubles likely to come down the pike, setting the stage for a rebound that should carry the major averages higher by at least another 5 or 6 percentage points in the next few months.   Another good example of the bad news being shrugged off was yesterday's release of the minutes of the Federal Reserve's March 18 meeting in which the gnomes running the central bank indicated they expect a first-half slowdown, with some concerned about a "prolonged and severe economic downturn." Despite the negative tone from Fed policy makers, stocks were largely unchanged on the day, whereas two months ago these comments would likely have set off a sharp selloff in equities.   The message the market is sending up right now is that the Fed is addressing the economy's problems. We may trade sideways for a period, but we've likely passed the lows at this point and the next sizeable move will be to the upside.   While we never want to make too much of a fuss over just one data point, today's oil inventory stats, which contrary to expectations showed a big draw in stockpiles, suggest that the U.S. economy remains quite robust. For other signs that the worst is behind us, ignore the poor earnings results that are likely to be reported in the next several weeks. Instead, you should focus on the forward-looking comments that accompany those statements: While those remarks are likely to be somewhat cautious, we suspect on balance they won't be overly pessimistic.   Until Next Time,   Your Aggressive Trader Team   Advertisement ------------------------------------- Ground floor opportunity as precious as gold.   Here's how to phenomenally improve your investment profits by buying stocks when they're downright cheap. Take, for instance, the current bull market in gold.  We think gold will more than double in the next few years, thanks to the Fed's loose money policies.  And along the way, those who buy the dips, will make the lion's share of profits.  Of course, buying stocks at the bottom of their price range or on a dip takes courage, because that's when they look their worst.  But with the right information and methods at your fingertips, you can take advantage of many exceptional investments that are poised for rapid gains.    For instance, we've already spotted several undervalued gold companies that could do very well in the months ahead. To find out about these and other explosive opportunities on an on-going basis, just click on this link . . .  Leeb's Ground Floor Trader.  -------------------------------------   If you cannot view this mailing click here. This email was sent to LEMMETRY@GMAIL.COM. 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