Market: Bull run is not over.

The market has been hot lately. Dow has been setting record high, advancing 25 times out of last 28 trading sessions. It has been an incredible run led by many industrial, commodity, biotech, energy as well as multi-national conglomerates which have been benefiting from weak dollars. Lagging financials also have caught up with the rest of the market as well.

Traders are very nervous after this run-up. Pressure to sell has been building and today many use the weak consumer spending data as an excuse to sell. Some claim we are due for a correction with maginitude worse than the one that we saw in Feb. Many bears point out that weak housing, auto, and high energy price will weigh on the consumers. As they tighten their purse, the economy is in for a steep deceleration. The recession is imminent and the market is in for a nasty downside surprise.

I am very optimistic about 07. As I stated early this year, I see 07 as a very nice year for bulls. The economy was getting too hot last year. But it is now in check by the declining housing and auto sector. I believe that the economy is slowing but the growth will still be there. This moderation will allow Fed to ease towards the end of this year. At worst, Fed will stay with rate policy unchanged as the economy continues to pour our mixed batch of economic data. Fed is unlikely to be a negative catalyst in 07. As the economy makes transition from an expansion mode into a moderate growth mode, there will be a moment when people may perceive the weak incoming economic data as looming sign that the recession is around the corner. This is precisely why the current market sentiment incorporates plenty of pessimism that can serve as fuel to sustain further rally.

Currently there are massive amount of infrastructure investment by the emerging economies such as China, India, Brazil, Russia, other Pacific Rim nations. This phenomena still has legs and the economic growth in these nations is likely to persist for next a few years. Major US multinational companies will continue to show steady earning growth. This earning growth will continue to surprise the market as many traders expect slowing earning growth momentum in the US. I think with plenty of the cash sitting aside and with many bears pleading for possible recession, the market will trend higher as it climbs a wall of worry.

We may see a short pullback in the market as the selling pressure has been building and people are seeking excuses to sell. However, I think if there is a sell-off, it will be much short-lived than the correction that we saw in middle of March. I think sell-off presents a good buying opportunity for our group.

I continue to recommend buying financials which will eventually benefit from fed easing. JPM and GS shouod be the names to focus. I see JPM bleaching above $60 long term. I am sticking with my TP at $270 for GS. I like China names. CTRP and FMCN should be bought upon weakness. My TP for CTRP and FMCN is $80 and $50 respectively. I also like AMR which has been lagging the market and its earning power is underestimated and underappreciated by the market. When the sentiment improves in the aieline sector, AMR should trade in mid $40's. Biotechs are good because its earning growth is less dependent. GENZ, PDLI, and CELG should be good names. AMGN has seen so much selling. But I stand by my convinction that it will see light at the end of the tunnel. IBM is a great multinational company to focus on. RIMM has been killing us because it is defying gravity. I have been wrong about this company and the company could go even higher from this level and even I am getting more bullish on the company but have not yet decide to change my view yet.


The current stocks in that I cover are: Filthy Rich Tech ideas (comprised of Openwave, Avid Technology, Tivo, IBM, and Research in Motion), Filthy Rich Biotech ideas (comprised of Amgen, Celgene, Genzyme, Isis pharmaceuticals, Alnylam pharmaceutical, and Protein Design Lab), Filthy Rich Financial ideas (JP Morgan and Goldman Sachs), Filthy Rich China ideas (Focus Media Holding and Ctrip.com), Filthy Rich Transportation ideas ( American Airline and Southwest Airline), and Filthy Rich Specialty Retail ideas (Peet's coffee)

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