October Opens Ugly

The last two months we have been inside an S&P 500 trading range of 1120 to 1220. By the end of September we were pressing against the lows and wondering if the support would hold. Then comes the first trading day of October where Mr. Market kicked down the doors making new lows at 1099.

Granted, this move could be rejected Tuesday with a bounce back above 1120. However, I sense we will be probing to lower lows from here. My guess is that we will flush a good 5-6% lower to around 1040 on the S&P which corresponds with Dow 10,000. There should be very strong support there and I will be tempted to play a short term bounce.

Would that be bottom? Yes, if there is no recession in our midst. And no, if a recession comes a calling with subsequent earnings and share price declines. I'll keep you posted on my thoughts as we get there.

Featured Commentaries on Zacks.com
•  Recession & Bear Debate Roundtable Review Video
•  Will Earnings Season Be the Catalyst?
•  Value Stock Picks for October 3rd

Best,

Steve Reitmeister
Executive VP, Zacks Investment Research

Today's Top Stories: Tuesday- October 04, 2011

ZACKS RANK BUY STOCKS

• Aggressive Growth - Amerigon, Inc. (ARGN) Zacks Consensus Estimate for this year is up 5 cents, to $0.53. Next year's average forecast jumped 29 cents, to $0.91. This is expected growth rates of 20% and 72%, respectively. Read More...
   
• Growth & Income - Boston Properties, Inc. (BXP) FFO came in at $1.23, beating the Zacks Consensus Estimate by 5 cents. It was a 10% increase over the same quarter in 2010. Total revenue rose 11% to $436.5 million. Read More...
   
• Momentum - ONEOK Partners, L.P. (OKS) offered its 2012 guidance and expects net income to increase 20%. The company's projected range is now $740 million to $800 million. Plus, the next few years of EBITDA expectations look solid. Read More...
   
• Value - The Jones Group Inc. (JNY) has a price-to-book ratio of 0.7. A P/B ratio under 3.0 usually indicates value. It also has a really low price-to-sales ratio of just 0.2. A P/S ratio under 1.0 can mean undervalued. Read More...
   

Learn how to profit from our exclusive Zacks Rank stock-ranking system with free resources. Read More...

• Top 5 Real Estate Mutual Funds Read More...
• Mutual Fund Homepage

• Bull Of The Day: Agrium, Inc.
  Full Zacks research report: Read More...
  
  
• Bear Of The Day: W.R. Berkley Corp.
  Full Zacks research report: Read More...
  
  
• Ahead of Wall Street
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• Zacks Industry Outlook: Real Estate Investment Trusts Outlook - Oct. 2011
  The REIT market has been driven by an increased inflow of funds as institutional investors allocated more capital to the industry. Read More...
  
  
• Analyst Blog Highlights
• BP Eyes Tangguh for LNG Expansion
• Duke Energy's RFP in the Carolinas
• Covidien Hikes Dividend
• Full Analyst Blog

• Value Stock Picks-Oct. 3, 2011
• Recession & Bear Debate
• Cyclicals Lead the Way

PeopleAndPicks.com:

VIP "Neurodoc" has a remedy for the market flu with his BUY calls in (QID), (SDS) and (TZA). Read More...

EARNINGS TRENDS: Is a Recession Coming Next Year?

Based on many parameters, I'm starting to think a recession in 2012 is more and more possible. Read More...

• Is Morgan Stanley the next Lehman? - The Buzz @ CNNMoney.com
• The Solyndra Bankruptcy @ FOXBUSINESS.com
• Home-health firms hit by Senate panel findings @ MarketWatch.com

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