Momentum versus Economics

Monday, December 04, 2006 | 02:33 PM

Momentum traders continue to drive stocks higher, regardless of what the economic data is.

The latest bit of Reality intruding into the party?  A warning from Lansdstar (LSTR), a $2.3B trucking company, which warned:

Landstar System CEO says lowers forecast for Q4 diluted EPS to between $0.44-$0.49/share, lowers Q4 revs to $620 mln and $635MLN - Reuters

Consensus is for Q4 EPS of $0.52 and revs of $697.5 mln.

That's not exactly a horrific miss -- its a range that might only be a few cents off from the prior expectations.

Here's what it did to the Trannies:


Given the momentum into the market today -- light volume notwithstanding -- I wouldn't be surprised if the market shakes it off and keeps going . . .

Monday, December 04, 2006 | 02:33 PM | Permalink | Comments (16) | TrackBack (0) add to | digg digg this! | technorati add to technorati | email email this post



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I think folks here might be missing something. Who thinks that the amazing amount of M&A activity is related to lots and lots of great companies trading at very low valuation levels? I don't remember a time when M&A deals were so prevelant.

Now, when you say momentum investors, everyone thinks of the go-go late 90's dot-com environment. I don't see that at all. What I see are an enormous amount of companies making records profits, cash building up, P/E ratios falling and the economy (ex-housing) looking very strong. Yes, the budget deficit is high, but as we slowly extract ourselves from Iraq, those deficits will continue to shrink at a more rapid pace.

What am I missing (or better yet what have the Bears been missing for the last 5 months)?

Posted by: Jdamon | Dec 4, 2006 2:58:29 PM

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