Jim Paulsen - Consumer Discretionary Stocks As A Leading Indicator

Jim Paulsen of Wells Capital Management, in his 10/17 investment letter, notes that the S&P Consumer Discretionary Stock Price Index was recently at an "all-time" relative price high.  He argues that this is evidence that the U.S. economy is not going into recession.  Furthermore, based on the record of recent decades, an uptick in consumer discretionary spending is a precursor of private sector job growth. 

Jeremy Siegel on Europe and the Markets

Wharton Professor Jeremy Siegel told Bloomberg that if the European Central Bank were to announce a major backstop of European sovereign debt, say to the tune of 2 trillion dollars or more, the equity markets would take off. 

Three More Bulls

UBS' Jonathan Golub told Bloomberg sees the S&P at 1350 by year's end.  Even though he has pulled back his earnings estimates, absent a European blowup, valuations are supportive.

David Kotok of Cumberland Advisors, writing on the Cumberland web site,  sees the S&P in the 1350-1400 range.  He says there is too much pessimism and very little chance of recession.

Anthony Dwyer of Collins Stewart told Bloomberg he sees the S&P at 1500 in a year with the 10-year treasury yield flirting with 3%.  It should be noted that this past summer, Dwyer was looking for 1550 by the end of 2011. 

Ralph Acampora Bullish

Veteran technician Ralph Acampora told Bloomberg on 10/17 that he sees the S&P going to 1375 in the next few months.  Acampora emphasizes the importance of leadership stocks as a measure of the health of the market and IBM is such a bellwhether stock.  As long as it is making new highs, the market should steam ahead.  Ironically, a few hours later, IBM reported somewhat light revenue for the third quarter and the stock promptly sold off $8 in after-hours trading. 

Jeff Saut Sees Market Overbought Short Term

Jeff Saut of Raymond James in his weekly market commentary (10/17) calls the market overbought in the short term but he feels that market lows are in for the year and sees upside potential to 1370 by year end.

Barton Biggs Cautiously Positive

When we last heard from veteran hedge fund guru Barton Biggs in late September, he was quite cautious on equities saying he had reduced his exposure to them significantly.  Today he told Bloomberg that he was more positive on the markets going forward based on recent constructive economic news.  As such he has adjusted his asset allociation with stocks representing about 65% of his mix. 

Nobody Asked Me But ...

Market sentiment is all over the map but if a consensus exists at all, it is that we are in a trading range of a couple of hundred points.  Jim Rogers points out that as evidenced by the 1970's, trading ranges can last for a very long time, as much as a decade.  And, he says, we may well be mired in such an extended period right now.  Rogers' opinions should never be ignored.

Frank Holmes on Recent M&A As A Bullish Sign

Frank Holmes of U.S. Global Investors (10/14) sees the recent M&A activity in the energy and mining sectors as a sign of value in the the equity markets.  He notes Sinopec's purchase of Daylight Energy, BHP's purchase of Petrohawk and B2Gold's purchase of Aurynx Gold, among others.  Holmes was quite accurate a couple of weeks back in predicting a market bounce from oversold conditions.

Jim O'Neill of Goldman Sachs Minimizes Recession Risk

The influential Global Asset Management Chairman of Goldman Sachs, Jim O'Neill, does not foresee a double dip recession in the U.S.  Moreover, he does not see a hard landing for the Chinese economy which some, like hedge fund manager and noted China short-seller Jim Chanos, are calling for.  O'Neill's outlook would bode well for stock prices.

Byron Wien

Long-time Wall Street strategist Byron Wien, currently with the Blackstone Group, wrote on 10/3 that after all the negativity of recent weeks, the market was poised for a "positive move", particularly if Europe showed signs of taking serious steps to address its financial crisis.  This is looking like a good call from a wise veteran of The Street. 

More Technical Analysis

Mary Ann Bartels of Bank of America:  On 9/19, Bartels talked of a 50% probability  that the S&P would move into the 910-985 range.  On 9/25, she anticipated a range of 910-1020 into the first quarter of 2012.  However, longer term, Bartels feels that stocks are still the place to be.

Dennis Hynes of R.W. Pressprich has for months, most recently on 9/23 on Bloomberg, recommended selling into rallies.  He also sees gold resuming its uptrend.

Reviewing the Calls of Market Technicians

Louise Yamada, Technical Research Advisors, 9/20:  Ms. Yamada  was negative on stocks, but bullish on gold and silver.

Katie Stockton, MKM Partners, 8/16:  After bouncing off early August lows, S&P would hit ceiling at about 1220.  She recommended selling into rallies.  A good call.

Carter Werth, Oppenheimer, 9/2:  Market should hold above its early August low of 1100.  As of this moment, this call is being put to a severe test.

Eugene Peroni, Advisors Asset Management:  On 9/15 on CNBC, Peroni felt that the market was at a "pivotal moment" with the potential to move higher.  He particularly liked metals and materials, especially oil - ouch.  Back on CNBC on 9/29, Peroni looked for a break below the August lows, but he was constructive beyond that based on continued low interest rates and corporate earnings.

Barry Knapp Again

For the second time in two trading days, Barry Knapp of Barclays, appeared on Bloomberg during a major sell-off and reiterated his plus 1300 target for the S&P by year's end - a real profile in courage.

The VIX As A Positive Indicator

Jim Paulsen of Wells Capital Management and Jeffrey Kleintop of LPL Financial told Bloomberg that the rise of the VIX, the Chicago Board Options Exchange Volatility Index, above 40 is a positive for the market. For Paulsen, this measure currently indicates near panic and as such is a contrarian buy signal.

Warren Buffett vs ECRI

On 9/30, Warren Buffett and Lakshman Achuthan of the Economic Cycle Research Institute provided some yin and yang.

Lakshman asserted that a return to recession is "inescapable" and unemployment is accelerating upward. Most alarming, this will occur regardless of what transpires in Europe. According to Barron's, the ECRI has predicted the last three recessions with no false positives

  

Then there was Mr. Buffett saying he was confident we are not heading for a double dip and that he is buying stock aggressively. He said that the 70 or so companies that he owns are performing quite well and he expects that to continue.

  

We report, you decide.

Market Prognostications in the Midst of Chaos

Given the violent market swings of the last few weeks, some of the most recent calls are most intriguing.

Thomas Lee, market strategist for J.P. Morgan, told Bloomberg Television that he is maintaining a target of 1475 for the S&P. Cynics might counter that General Custer was reported to be optimistic on the morning of the Little Big Horn. Lee allows that the stars will have to be aligned, particularly regarding Europe, but he still feels that the microeconomic indicators (such as rail shipments) and company valuations are favorable. Lee does have a good track record and merits attention.

Barry Knapp of Barclays Capital echoes Lee's reasoning, but Knapp has lowered his target to 1300. Economist Brian Wesbury, a long-time bull, is also upbeat on the U.S. economy based on high-frequency economic indicators.

Jeff Saut, market strategist for Raymond James, is always interesting as he looks at both fundamentals and technical levels. He is "constructive" on the markets as long as the S&P holds 1100. Saut feels that the media overplays the doom and gloom and this can be self-fulfilling.

Jeremy Siegel of Wharton, no surprise, told CNBC on 9/30 that he sees long-term value in the market, particularly 3-5 years out.

On 9/22, venerable hedge fund manager Barton Biggs told Bloomberg that he was nervous and saw the potential for another 20% drop in the markets if Europe didn't act swiftly. This was noteworthy because he had only recently been quite bullish. Biggs' track record recently has been spotty but because of his experience, perspicacity and humility, he should not be ignored.

Perm-a-bear Gary Schilling (9/27, Bloomberg) sees the economy rolling over and housing dropping another 20% over the next 3 years.

Doug Cliggott of Credit Suisse told Bloomberg (9/28) that he saw the S&P at 1100. More striking, Cliggot sees S&P 2012 earnings at $81, more than $20 below consensus. He blames the withdrawal of federal stimulus.