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COPYRIGHT 2003 FDCH e-media
Original Source: MONEY 2003
GREG CLARKIN, CNNfn ANCHOR, MONEY 2003: We are back and we`re joined by Richard Suttmeier. He`s the chief market strategist at Joseph Stevens. So if you`re sitting at home waiting for your turkey to cook possibly, give us a ring with your stock questions. Richard is here to take your calls. Our number is 1-800-304-3638.
Richard, welcome. Happy Thanksgiving.
RICHARD SUTTMEIER, JOSEPH STEVENS & COMPANY: Thank you very much.
CLARKIN: We`ve got quite a bit to talk about market-wise here, three quarters through the year almost.
SUTTMEIER: Yes. When I was here on Labor Day, I was noticing that the market was kind of losing momentum. It`s tried to have some sell signals. But every time it was close to sell signals, technically it didn`t happen. So what you`re seeing is a slowdown in momentum. Since Labor Day, the Dow is only up 3.9 percent and the Nasdaq`s only up 7.9 percent. So it`s slowing . . .
SUSAN LISOVICZ, CNNfn ANCHOR, MONEY 2003: Well that compares to sort of the sprint that we`ve had since the lows of March.
But we had this week, as Mary Snow alluded to, just a deluge of economic report. Was there anything that particularly caught your eye and how does it bode for the markets from here?
SUTTMEIER: The thing that concerns me is watch the labor components of the ISM. They`re still under 50. We have all this robust growth in the headline numbers but it`s not creating jobs.
LISOVICZ: In manufacturing?
SUTTMEIER: In manufacturing. And I think you`re going to see the same thing in the service sector, that productivity is way up and they`re able to do things without hiring new workers. And I was a bit confused about the October payroll data being so great on the heels of the Challenger, Gray & Christmas, showing that layoffs were up 125 percent in October. So there`s a little disparage here between the data points.
CLARKIN: Well, is it too early in the recovery for jobs to be created or should we have expected to see more then what we`ve seen so far?
SUTTMEIER: I think we should have seen them by now, particularly with 8.2 percent GDP growth in the third quarter. That should have created a lot more jobs than what we`re seeing.
LISOVICZ: So then why did we get such a spectacular number for the third quarter? I mean, when we got the revised GDP number, it was even better than the initial, which was the best in 19 1/2 years.
SUTTMEIER: Well, the Fed was pumping a heck of a lot of liquidity into the banking system and now money supply is contracting, so that`s a little bit of a problem. And not only that, you had all the fiscal stimulus hit with $400 checks per child being spent in the stores.
CLARKIN: All right. Richard, let`s go to the phones. We have Ronald in Illinois standing by.
Ronald, welcome. Happy Thanksgiving. And your question?
CALLER: Happy Thanksgiving.
I want to know about GE [Company: General Electric Company; Ticker: GE ; URL: http://www.ge.com/] stock? General Electric.
SUTTMEIER: OK. I`m going to look at stocks mainly today using two kind of profiles. One is called ValuEngine.com. That`s a fundamental screening of data which ranks stocks one to five and give us some projections for the stocks, as well as my technical models, which is based upon a 12 by three stochastic as momentum and closes relative to a five-week modified moving average. So there`s two ways I`m looking at stocks.
GE technically has declining momentum. And the five-week modified moving average is at 28.81. So we`re just barely under it. So we need to close above that tomorrow and that would give some upside momentum to it. Now, ValuEngine, on a scale of one to five, has it ranked a three, which is a neutral rating. And it`s got some downside risk over the next one to three years. So this GE, at best, is a hold at this point.
CLARKIN: So not strong feelings one way or the other?
SUTTMEIER: Not strong feelings one way or another. If I owned it, I`d hold it. I wouldn`t add to it.
CLARKIN: OK.
LISOVICZ: How do you feel about GE`s management? How is Jeff Immelt doing at this point? You have any conclusions about that?
SUTTMEIER: It seems like he`s trying to take apart the pieces now, spinning off things.
LISOVICZ: Undoing what Jack Welch built?
SUTTMEIER: It could be that way. It seems like - I read an article in the paper recently how you look at GE as a big mutual fund.
CLARKIN: And sure, I mean, for the longest time it was always said to be a proxy on the economy to some degree. So the fact that it`s neutral . . .
SUTTMEIER: And the fact that it`s lagging the market, that may be providing a warning for the economy overall. Investors don`t want to play GE. Trader don`t want to play GE.
LISOVICZ: The GE barometer.
Well let`s go out to Nevada now. Joe from Nevada has a question for Richard.
Hi, Joe, and happy Thanksgiving to you.
CALLER: Happy Thanksgiving to you guys.
Richard, could you elaborate on the QQQ? I know you sort of follow that and you sort of thought that it was going to maybe trend down but it seems to be going against what you`ve been telling us.
SUTTMEIER: Yes, that is absolutely correct. I`ve been not to good at timing the top to this market. Sometimes you win, sometimes you don`t. I`ve had some great market calls in the past. Right now, I see the market going sideways to up.
One recommendation I made on the New Year`s special here on CNNfn at the beginning of the year was selling the mutual funds that you own, because...
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