October 10, 2006
On September 25th, I wrote a blog titled, “I’m Not Looking So Smart…Yet”. I added the “Yet” because I knew that both the events I was predicting despite media reports much to the contrary, would happen. I just wasn’t sure they would happen in the six weeks I had predicted them to happen (which would give me to the end of October given that I predicted these events on Septemeber 14). The two events were a short-term rally in the dollar’s strength and a substantial correction in the U.S. markets (of course every analyst out there is clamoring for Dow 12,000 now) which would also influence global markets. Well one of the two predictions is taking place now finally.Yesterday the dollar traded at a 10-month high against the yen and a three-month high against the euro. However, they weren’t monumental highs. Still, I think the dollar rally will continue in the short-term.
Well what about the U.S. market correction? So far, even N. Korea nuclear tests have not been enough to keep U.S. markets from rising. But again underneath the surface, things continue to look bad. Insiders apparently aren’t as enamored with this market as every analyst out there and they apparently don’t think the market is screaming buy with cheap P/E ratios. Just remember a low P/E ratio doesn’t always equate to a good buying opportunity. Sometimes there are poor economic conditions that justify a lower P/E. Check back later today and I’ll write more about my thoughts on this topic.
