The most frequently overlooked indicators in the stock market are often those that are most obvious, such as one that has been staring us in the face for years.
Sometimes you need to chuck the technical analysis to get a true read on the pulse of the market. Who needs Channel Analysis, the Gann Angle Projection, Fibonacci Resistance and the Elliott Wave Principle when we have the Maria Mood Monitor as a leading indicator?
Admittedly, we only discovered this theory recently. That’s because Maria has been staring us in the face for years. Too obvious.
Unless you’ve been dead or wasting your life reading Bollinger Bands, you’ll know Maria is CNBC cheerleader Maria “Pom Poms” Bartiromo.
Wall Streeters have dubbed the biz TV star as the “Money Honey.”
Yet, the smart money seems to have overlooked this painfully obvious market sensor – the Maria Mood Monitor.
On Sept. 21 (the market’s recent bottom), while technical analysts were buried in a mountain of charts and Aunt Mabel was diversifying her stock portfolio by burying cash in assorted coffee cans, Maria was sending out a screaming-buy signal by completing an entire report without flashing the trademark smile. Early in 2000, at the height of the bull market zaniness, Maria was the poster gal for bubbly exuberance.
The supercharged commentator modelled a killer smile that made investors lose their heads. Mesmerized by Maria’s charm, the masses seemed convinced the raging bull market would last for a century or so.
It seems that even Merrill Lynch analyst Henry Blodget, then the celebrated King of Internet Stocks, was watching Maria on the floor of the New York Stock Exchange.
How else does one explain how Blodget plum forgot what they taught him in school about stocks that trade at a price-earnings multiple of 300?
When a pouty, sombre-faced Maria appeared on Sept. 21, we ought to have known the market was ripe for a rally. Rallies tend to feed off low market sentiment.
In the month or so since then, the markets, and particularly tech stocks, have staged a powerful rally that many believe will be a shortlived traders’ rally. The TSE 300 is up 10 per cent to 7,315, the Dow Jones Industrial Average is up 21 per cent to 9,908 and the tech-weighted Nasdaq Composite is up 36 per cent to 1,898.
Those who had guts to nab Nortel Networks in the $7-8 range post-Sept.11 have almost doubled their money. Other winners in the past month include CMGI on the Nasdaq, a four-bagger, and Digital River (Nasdaq), a 21/2-bagger. Calgary’s wireless twins on the TSE, Cell-Loc and Wi-Lan, have tripled and doubled respectively.
That’s the good news.
Now, the bad news.
A recent inspection of the Maria Mood Monitor shows the stock lady merrily trumpeting the high-flying techs with a smile that could light up a Christmas tree. Shades of the tech bubble of 2000 when Maria came to symbolize a roaring stock market with an explosive TV persona that resembled a one-woman ticker-tape parade.
With eBay trading at 182 times earnings, numerous other stocks starting to look overheated and no clear signs of an economic recovery, the recent rally does look vulnerable to blowing a fuse.
And raining on the Maria Bartiromo parade.
Disclaimer: The Maria Mood Monitor is still in Phase I of clinical testing and therefore has yet to be scientifically proven as a cure for a sick portfolio.
STREET TALK: While many of his peers have been bearish on the oil and gas sector for several weeks, Calgary analyst Peter Linder of Research Capital has been sticking to his guns, even after the patch was rocked on Nov. 15 by the biggest single-day oil-price skid of $5.
In his report to shareholders the day after the slide, Linder wrote: “We don’t know where the OPEC/Russia game of chicken will end – in a week, in a month or in six months. All we know is that it will end and, at that time, oil prices will jump. It is way too early to throw in the towel and write off all of 2002. We see as many positive signs as negative signs for 2002 oil prices. Accordingly, our recommended strategy for investors is to focus on gas-weighted producers and slowly start buying now. Do not follow the ‘herd mentality.’ ”
* LAUGHING OUT LOUD: Three weeks ago, this column featured the kind folks at the Financial Freedom Report newsletter, who e-mailed us a hot tip that was guaranteed to make us richer than J.C. Anderson. Surprise, surprise!! The stock, touted at $2.45 U.S., is at 40 cents, down 85 per cent.
* CALL RIPLEY’S: Believe it or not, a week passed without a North American airline poohbah panhandling at the government trough.
* CHEERS: To Circa Enterprises, a Calgary-based manufacturer of telecommunications products that has bucked the trend by maintaining earnings comparable to a year ago.
* JEERS: To Report On Business TV for its unprofessional look in filling air time with too many fish out of water – Globe and Mail scribes. If this is convergence, who needs it?
* SAGE ADVICE: “The Nasdaq, properly understood, is nothing more than bingo for yuppies”
– broadcaster Rex Murphy in a recent rant on The National.
HOT ALBERTA STOCK: Cell-LOC
CELL-LOC
CLQ-TSE $1.53
Up 66 cents (+75.9%) on 837,900 shares (for week ending Nov. 16).
Just like the good, old (bad, old?) days when tech stocks moved if the CEO cracked a good joke. We can't tell you whether Michel Fattouche, CEO of the Calgary-based wireless-location technology company, was cracking jokes, but he must have been in good humour watching this spike (which was even more impressive than the recent runup of his pal Hatim Zaghloul’s company, Wi-Lan) without a news push.
COLD ALBERTA STOCK: Precision Drilling
PD-TSE $33.35
Down $8.12 (-19.1%) on 2,747,800 shares (for week ending Nov. 16).
Plunging oil prices resulted in some nasty haircuts in the oil patch, but the drillers really got drilled. Calgary-based Precision Drilling got the buzz-cut treatment from shareholders. The record $5 US drop in oil prices on Nov. 15 precipitated a massive selloff, with 1,497,100 shares trading hands on the day. It could be a long cold winter in the patch with OPEC and the Russians staring each other down.
