Owens Illinois (OI) & Economic Data

I mentioned Owens Illinois (OI) a couple of weeks ago.  It’s having a nice day today and I think it has a good chance of going to its 200-day moving average of around $50.  I don’t believe it’s too late if you don’t own this one to jump on. 

Overall, I’m expecting a few more days of rally but I’m more interested in shorting more on the way up (selling) than trying to ride up this very short rally.  Light volume and better than expected economic news has given the bulls a reason to buy.  I’d caution you on relying too much on these economic numbers that come out daily to trade on.  We’ve had almost 20 pieces of economic data come out in the last 3 days and some has been better than expected.  But, one month’s data does not make a trend.  I want the economic data to get better and I’m always pleased when it does come out better.  But look, we’ve had persistently weak economic data for several months.  It’s not turning the corner just yet.  Some on Wall Street are happy because the data is not as bad as they thought it would be.  It’s less worse.  That’s like saying your son is getting sentenced to 12 months instead of 14 months.  Yippee!  You still aren’t real proud of your son.  That’s our economy.  Eventually, it will be rehabilitated.  But, for now, it’s still in trouble.  Hence, more pressure on stocks.

From a trading perspective, I look at the pieces of economic data that correlate with equities.  GDP doesn’t correlate but the rate of growth does.  Also, consumer confidence correlates very well.  So, if you’re going to watch these daily numbers, know which ones matter and which ones don’t.  Most don’t matter from  a shorter-term perspective.


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August 2008
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