By Bernard Lo and Michael Patterson

Oct. 6 (Bloomberg) -- Sustainable economic growth and low interest rates worldwide will spur a “multi-year” bull market in equities, led by developing nations, said Fidelity International’s Anthony Bolton.

“Low growth means low interest rates, and actually that’s one of the best environments for stock-market investing,” Bolton, president of investments at Fidelity International, which oversees about $141 billion, said in an interview on Bloomberg Television in Hong Kong. “Anything that can show growth in this low-growth environment is going to be bid up by investors. It’s very pro the emerging-market world versus the developed world.”

Policy makers in the U.S. and Europe will keep interest rates low for another year even as Australia’s central bank unexpectedly raised rates today, Bolton said. He’s “particularly optimistic” on Chinese stocks because the government will foster sustained economic growth without fueling inflation.

Bolton’s view contrasts with New York University Professor Nouriel Roubini and Elliott Wave International Inc.’s Robert Prechter, who have said shares are poised to retreat. Pacific Investment Management Co.’s Bill Gross predicted low economic growth will restrict annual stock returns to 5 percent, while Nobel Prize-winning economist Joseph Stiglitz said investors have been “irrationally exuberant” about an economic recovery.

Stock Rally

The MSCI Emerging Markets Index has climbed 62 percent this year on expectations that developing nations will lead a rebound in the global economy from its worst recession since World War II. Emerging-market economies may grow 6 percent next year, compared with 1.8 percent growth in advanced nations, according to HSBC Holdings Plc.

The MSCI emerging markets gauge climbed 1.5 percent as of 12:23 p.m. in London as higher commodity prices boosted earnings prospects for producers and HSBC said its purchasing managers’ index for developing economies posted its biggest gain in more than a year. The MSCI World Index of developed nations, up 21 percent this year, gained 0.9 percent today.

Bolton, Fidelity’s first fund manager in Europe, said on March 11 that the U.K. equity market was at or near its lowest point. The nation’s benchmark FTSE 100 Index, which tumbled 31 percent in 2008, bottomed on March 3 and has since rallied 45 percent. Bolton dumped his holdings of telecommunications stocks in the first quarter of 2000 at the height of the industry’s bull market.

Bolton’s Special Situations Fund beat the FTSE All-Share Index on an annual basis by 6 percentage points from 1979 through 2007, according to Fidelity. Fidelity International is the London-based affiliate of Fidelity Investments, the world’s largest mutual-fund company.

To contact the reporter on this story: Bernard Lo in Hong Kong at blo2@bloomberg.net; Michael Patterson in London at mpatterson10@bloomberg.net.

Bottom to bottom usually takes 5.5 yrs. So Mar 2009 +5.5 years would make 2014 Sept a serious bottom. Generally the long term uptrend is less steep than the down trend. thus it takes more than half of 5.5 yrs to reach the peak, i.e about 3 years from Mar 2009 i.e around Mar 2012.

In between from bottom to peak there are 5 waves. Also in between there are the 3 possibilities in the other thread.

When talking about 'entering the market', one needs to specify whether it is to buy or to sell ...

Because when there are two persons deciding,

One will be happily buying, and the other will be happily selling...

Relax, this is just some correction, not mkt crash nor end of the world yet.

For your reading n info:

 

Oct. 1, 2009, 12:01 a.m. EDT · Recommend (1) · Post:

Is October correction inevitable?

Commentary: Not if you study patterns of crash years

By Ethan Anderson

GRAND RAPIDS, Mich. (MarketWatch) -- Most investors seem braced for a big correction, but in my experience the majority is usually wrong.

In order to predict the future, one must consider the past and research similar market cycles to come up with a probable forecast for the future. After studying comparable periods to the one we are experiencing today, investors will realize that an October correction is not likely.

Consider the following:

We have not yet recovered fully from 2008. The market rebound after the crash of 1987 did not see a correction of 10% until 1990, which is more than two years later. Moreover, that correction was after "only" a 35% drop from top to bottom. At present, we are only six months removed from a 55% drop in the market.

   
TRADING STRATEGIES: OCTOBER
Will the bull survive?
October is best known for spectacular market crashes. At the very least, the month's volatility can spook many investors. But many of our experts say there's good reason to remain in the market, despite whatever jitters you may have.

• Karabell: What about the China effect?
• Is October correction inevitable?
• Time to take a stand on rally
•  Eliades: March lows may come back  
•  Hennessey: Not as bad as everyone thinks   

/conga/story/2009/10/trading-strategies.html 31978

On the fixed income side, TIPS is a good way to get some income and inflation protection. The Fidelity Floating Rate Bond Fund /quotes/comstock/10r!ffrhx (FFRHX 9.32, -0.01, -0.11%) still looks attractive. Blackrock Global Allocation /quotes/comstock/10r!mdlox (MDLOX 17.30, -0.25, -1.43%) is a wonderful fund with multiple asset classes.

For equities, Tom Soviero and some of the rest of the folks over at Fidelity Leveraged Company Stock Fund /quotes/comstock/10r!flvix (FLVIX 25.65, -1.12, -4.18%) are some of the best in the business, as is the team running the Kinetics Paradigm Fund. /quotes/comstock/10r!wwnpx (WWNPX 19.19, -0.57, -2.89%)

In conclusion, it is inevitable that a correction will occur in the market at some point, but research shows that an October correction is unlikely. A 3% to 5% pullback is conceivable for October, but do not prepare investments for a major selloff. You will regret it.

Ethan Anderson is a senior portfolio manager with Rehmann , one of the largest accounting, financial services and consulting firms in the Midwest. Anderson sits on Rehmann Financial's Investment Research Committee and has been recognized as a "5 star" portfolio manager by Morningstar Inc

Post:

Are you in the rally, or out of it?

Commentary: It's time to make a choice

By Tom Lydon

NEWPORT BEACH, Calif. (MarketWatch) -- These days, no matter what the markets do, there are still those naysayers who are sticking to their guns with admirable tenacity.

Heard any of these before?

"This rally is overheated."

"Any day now, the bear is going to be back."

"There's no way this is going to last. I'm staying out of it."

Despite a rally off the market's March 9 low that has continued with just a few pauses and hiccups, the skeptics are still out in force. How history repeats itself.

   
TRADING STRATEGIES: OCTOBER
Will the bull survive?
October is best known for spectacular market crashes. At the very least, the month's volatility can spook many investors. But many of our experts say there's good reason to remain in the market, despite whatever jitters you may have.

• Karabell: What about the China effect?
• Is October correction inevitable?
• Time to take a stand on rally
•  Eliades: March lows may come back  
•  Hennessey: Not as bad as everyone thinks   

/conga/story/2009/10/trading-strategies.html 31978

Missed opportunity

Big gains

Emerging markets: iShares MSCI Emerging Markets /quotes/comstock/13*!eem/quotes/nls/eem (EEM 37.95, +0.10, +0.26%) is up 84.1% off the market low

Steel: Market Vectors Steel /quotes/comstock/13*!slx/quotes/nls/slx (SLX 50.31, -2.42, -4.59%) is up nearly 130% since the low

Basic materials: iShares Dow Jones U.S. Basic Materials /quotes/comstock/13*!iym/quotes/nls/iym (IYM 52.62, -2.18, -3.98%) is up nearly 90% since the low

Banks: Financial Select Sector SPDRs /quotes/comstock/13*!xlf/quotes/nls/xlf (XLF 14.29, +0.01, +0.07%) is up almost 140% since the low

Real estate: iShares Dow Jones U.S. Real Estate /quotes/comstock/13*!iyr/quotes/nls/iyr (IYR 40.91, +0.05, +0.12%) is up almost 90% from the low

There's no way to predict whether this rally really has legs longer than a supermodel's, or whether it's going to stop short tomorrow. If you make the decision to begin taking part in it today, look for those spots trading above their 200-day moving averages and protect yourself on the downside with a stop loss.

Otherwise, sit back and enjoy the ride.

Tom Lydon is the editor of ETF Trends and president of Global Trends Investments, an investment advisory firm. Website is at www.etftrends.com .

Oct. 1, 2009, 12:01 a.m. EDT · Recommend · Post:

No reason to be spooked by October this year

Commentary: But markets should be wary of Iran

By Robert Maltbie

LOS ANGELES (MarketWatch) -- While some might get spooked by an often-volatile October, signs are that the markets are in strong shape.

Just the facts: My indicators are as bullish as they have been since March 2003, preceding a 26% upside surge in equity averages that year. Four out of five of our market indicators are bullish and one is neutral.

Let's start with the bear case:

The market is fully valued at 17 times earnings and it is too late to get in the market. But price-to-earnings is a backward-looking measure. If we use projected forward estimates, a different picture emerges. If we value the S&P 500 using 2010 estimates, which call for a 20% or greater increase in earnings, we find a more reasonable price-to-earnings ratio of 14, far below 19 where the market topped in 2007.

   
TRADING STRATEGIES: OCTOBER
Will the bull survive?
October is best known for spectacular market crashes. At the very least, the month's volatility can spook many investors. But many of our experts say there's good reason to remain in the market, despite whatever jitters you may have.

• Karabell: What about the China effect?
• Is October correction inevitable?
• Time to take a stand on rally
•  Eliades: March lows may come back  
•  Hennessey: Not as bad as everyone thinks   

/conga/story/2009/10/trading-strategies.html 31978

As for our neutral indicators, they are "sentiment" indicators showing that volatility and possibly fear have greatly diminished. This is evidenced by the CBOE volatility index /quotes/comstock/20m!i:vix (VIX 28.27, +2.66, +10.39%) which has retreated to 23 from a high of more than 80 a year ago when we were in free fall. Offsetting this is a bullish AAII pundit survey showing investment advisors are bearish, perhaps bracing for "seasonal harshness," by 39% bulls to 45% bears.

Our remaining indicators are all currently solidly bullish -- technical indicators, monetary data, liquidity measures and valuations. Our Ouiji board swigglies and charts show positive, lead by a strong breadth and upside volume that is recently supported by expanding new 52-week high-to-low ratio.

A final anchor of positive support is that the Dow, the S&P and Nasdaq all have broken decisively above 200-day moving averages and held their ground. These are characteristics of a market with healthy internals, good days are better and exceed bad days and more stocks are starting to participate.

Monetary Indicators: This is our most powerful market force, also called "Don't fight the Fed." Money stock is expanding at near 8% annual rate. The real rate is higher considered against the backdrop of a deflating economy which is what we have had for nearly two years now.

The yield curve is also very steep and positive in its slope. This is a powerful 1-2 punch for the market, the fed is pumping money into the markets and economy and rates are staying low. These two factors have been important catalysts of every major bull market since 1920.

Liquidity or the directionality of money flows is another bullish sign that is just getting started. After freezing up with the cataclysmic events hitting markets over the last year, corporate M&A is rebounding, stock buybacks are returning, and money is starting to flow back into equity funds, including exchange-traded and hedge funds.

Big-time mergers by Walt Disney Co. /quotes/comstock/13*!dis/quotes/nls/dis (DIS 27.46, +0.10, +0.37%) , Abbott Labs /quotes/comstock/13*!abt/quotes/nls/abt (ABT 49.47, +0.79, +1.62%) and Dell Inc. /quotes/comstock/15*!dell/quotes/nls/dell (DELL 15.26, +0.12, +0.79%) are starting up again, as these and buybacks have pulsed to nearly $50 billion in September. Meanwhile, money markets have experienced a $54 billion outflow lately.

These add up to more than $100 billion in possible additional demand for equities. Offsets of insider selling and IPO issuance although increasing, are still at non-threatening or neutral levels.

Last but not least, we must not forget valuations. This is also bullish both on absolute and relative levels. While we are at the onset of a new recovery in earnings, more stable indicators such as market capitalization-to-GDP and price-to-sales provide evidence of reasonably cheap valuations.

The market is at a 20% discount to GDP and relative parity to sales. In 2000, the market traded at 1.8 times GDP and the price-to-sales ratio was 2.3. It seems we've worked off a lot of excess over the last 10 years.

Our relative valuation measures are positive lead by an earnings yield to quality corporate bond yield ratio of 1.2, a spread last see in 1982. Stockowners are getting paid or reinvesting back in the company more than high-grade bond owners, and stockowners should see this earnings stream significantly grow over the course of he next two years or so.

Also, cash dividends on the S&P at a 2.1% tax-favored yield far exceed treasury yields out to 10 years. Cap this off with the fact that the Leading Economic Indicators index is now at 104 following four successive monthly increases.

With easy earnings comparisons and no inflation on the near term horizon we expect the Dow Industrials to break 10,000 in October -- barring geopolitical events.

	Score	Percent	Current
MARKET SENTIMENT	50.00	0.10	5.00
TECHNICALS	71.88	0.20	14.38
LIQUIDITY	62.50	0.20	12.50
VALUATION	78.13	0.15	11.72
EARNINGS MOMENTUM	70.00	0.15	10.50
MONETARY POLICY	77.78	0.20	15.56
		1.00	69.65

Robert Maltbie is a CFA and principal of Millennium Asset Management, a California-based registered investment advisor that provides investment management services to high net worth investors. He is also Managing Director of Singular Research, an alternative independent research provider focused on small cap stocks for institutional investors. See his Web site at www.stockjock.com.