Where are markets headed ?

Last week was a pivotal week with quite a few notable events in stock markets such as:

• Blowout earnings by Google and biggest gain (20%) in Google stock in one day. Just in March, Google stock came very close by my prediction about $399. Now it is heading higher and would cross $600 in summer 08
• Financials finally started showing upward trend with most of the stocks (and associated ETF) up by 10-20% plus
  
• DOW index is at mid-point (12750) of my short-term lower (12000) and higher targets (13500)
• Stock indexes in emerging countries except China showing recovery signs

So where do we go from here ?

• With major earnings due out in next 2-3 weeks, my prediction is that earnings would come out OK compared to worst earnings expectations and markets would remain stable and show slightly upward trend
• There would be one or two major misses (like Nokia) but would not impact overall markets in major way
• Financials and technology continue to show upward momentum
  
• Apple and Amazon should similar level of volatility as Google - my prediction is that both would have positive reactions to their earnings and could result in 8%+ jump in prices post earnings
• Yahoo/Microsoft tussle entering into crucial week with Yahoo reporting surprise earnings (on positive side) and Microsoft reaching its self-imposed deadline of Apr 26. If Yahoo reports good earnings (which they would most likely), it could go above $31 for first time since Microsoft's takeover offer
• I am sticking with my forecast of Dow reaching 13500 by Aug 08

So what are the recommendations to make some "green" ?

• MF Global - It operates as a broker of exchange-listed futures and options worldwide. It provides execution and clearing services for exchange-traded and over-the-counter derivative products. The stock went down from $30 to $10 due to trading by rogue trader losing $141 million. But now it is back up above $14 due to pre-announcement of good earnings. It could go upto $21 in 12 months giving 50% return. One can buy it between $12-$14 and sell covered calls for Jun 17.5
• ABK and MBI - these are the poster children of credit crisis. These credit insurance companies are going to report earnings in next 2-3 weeks with ABK reporting next week. If results are anything but worst as expected by market, these stocks would shoot up 20% in one week due to its heavy short covering. These are high risk stocks and should be considered only if your tolerance to risk is very high
• Finally, on mutual fund/ETF side, I am still for UYG, UUPIX. IN addition, I would start looking at MCHFX and MINDX. Both India and China markets are down by 20-30% and these MFs provide good entry point to get exposure to these markets
  

Good luck in investing

/Shyam