Week Ahead: Stocks Oversold, but Is Fear Overdone?
Posted by aangsunu on 3 July 2010
Source : cnbc.com
The stock market limps into the coming week both technically and emotionally weakened.
Friday’s disappointing June jobs number was the latest in a series of downbeat economic reports that have some economists looking to downgrade their growth forecasts to even more sluggish levels.
Stocks lost about 5 percent in the past week, and the major indices are all now negative on the year.
The S&P 500 fell 54 points, or 5 percent to 1022, 16 percent from its April 23 high.
Traders, meanwhile, were assessing the past week’s quick drop through some key technical support levels, which they see as a forewarning of more declines to come. Yet some analysts and money managers are beginning to see value in the oversold market.
“People are driven by fear. The uncertainty is huge in my view. It is overdone,” said David Kotok of Cumberland Advisers. “Markets may be discounting a double dip recession. I do not believe it is coming. Slow growth, high unemployment does not feel good, but it is not shrink. It’s growth and for American businesses, it is very profitable. We will see that in the earnings season that starts in a few days.”