After A 60 Percent Rally - Are Stocks Overvalued?

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City of Industry, CA --(www.USEquityNews.com)-- 11/27/2009 - Most Popular industry alert provided by U.S. Equity News. The major U.S. benchmarks a la S&P 500 (SNP: GSPC), Dow Jones (DJI: DJI) and Nasdaq (Nasdaq: IXIC) have rallied 60% and more since their respective March lows. Consequently, stocks are more expensive today than they were eight months ago.


Ironically, more investors are willing to buy stocks at Dow 10,000 than they were at Dow 7,000. The same economists who didn't see the March market bottom or 2007 market top coming, are now telling us that the recession is over. Even though the irony therein should be obvious, it's hardly publicized.

That's good for the economists, bad for the average investor.

General Motors Co.'s top European official said Friday that a plan for Opel to be unveiled next month will include a schedule to lauch new models and a financial break-even target.

Nick Reilly's comments in an official GM blog came as the U.S. automaker finalizes its restructuring plan for Opel and British sister brand Vauxhall, a program it has said will result in about 9,000 job cuts across the continent.

"We have developed a sustainable plan for the future, including a break-even target, which we expect to unveil in the middle of December," Reilly wrote.

"That plan will involve structural costs reductions," he added. "But importantly it will also include new product commitments, continued investment in research and development and an aggressive schedule for new model launches."

GM is currently in consultations with European government officials and employee representatives.

November has been an eventful month for leveraged and leveraged short ETFs. Direxion, ProShares, and Rydex all announced their tax-distributions, which were mostly rather tame, while FINRA made owning leveraged (short) ETFs just a bit tougher.

Let's start with the good news. Rydex SGI and ProShares announced that investors would be spared to deal with tax distributions in connection with their lineup of leveraged or short ETFs.

Direxion on the other hand announced considerable tax-distributions. The ex-dividend date for Direxion was November 20th. No prior notice was given by Direxion. As per Direxion's distribution announcement, the distributions ranged from 7.48% to 14.70% of NAV (on 11-20-09). Below is a list of affected ETFs. More than 99% of gains are considered short-term capital gains for tax purposes.

As a point of reference, last years tax distributions by Rydex exceeded 80% on one ETF.

Masimo Corporation (NasdaqGS: MASI - News) announced that one of its prominent customers, Advocate Health Care, has recently renewed its multi-year, system-wide contract for Masimo SET pulse oximetry technology. Advocate Health Care is Illinois' largest and one of the top ten health care providers in the U.S. It has more than 200 patient-care sites across Chicago. Financial terms of the contract have not been disclosed. 

Advocate Health Care has been Masimo's customer since 2001. The contract enables Masimo to support the pulse oximetry needs of more than 200 sites of Advocate Health Care. This will in turn boost Masimo's top-line. Masimo Corporation develops, manufactures and markets a family of non-invasive blood monitoring systems that consist of a monitor, circuit board and sensors. The systems are primarily used to monitor blood oxygen saturation levels and protect against hypoxemia and hyperoxemia.

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