A new Street$marts has been posted!
I am going to be on Fox Business’ Markets Now at 1pm today discussing the abysmal jobs report on Friday, the stock market’s rather muted reaction and what lies ahead this quarter.
There are a few scenarios which can play out from here and I will lay them out in detail this week in Street$marts, which I hope to work on in a few days. In short, my upside max of Dow 15,000 and downside of 13,700 remain the same. If you are or want to be bullish, the better and healthier path is sideways or down first and then an explosion to the upside later this quarter or over the summer.
Here is yesterday’s segment from CNBC’s Closing Bell. http://www.investfortomorrow.com/InMedia.asp
We have month and quarter end on Thursday so I would discount any unusual action until the new month begins next week. The bulls are hanging in, trying to push the S&P 500 to an all time high and I think that should be seen since it’s only a few points away here. But my comments from the other day still hold. I see the Dow’s potential upside as 15,100 and the downside as 13,700. There are enough cracks to warrant action, but not enough to worry about the bull market ending.
So far, 2013 looks a lot like how 2012 and 2011 began. And for those who remember, this has the look and feel of 1987 for different reasons although I am definitely NOT calling for a crash!
Enjoy the holiday shortened week for those of us who have it off! I think Good Friday is the only day where Wall Street is closed but not much else is.
Again, Happy Passover and Easter for those who observe those holidays!
I am going to be on CNBC’s Closing Bell today, March 26, at 3pm discussing the S&P 500′s continued assault on all time highs as well as the latest nonsense out of Cyprus, a country with the economic output of Vermont!
As you know, we have been very bullish on stocks since mid November, especially through the overhyped fiscal cliff and sequester embarrassments. Sadly, looking at Washington’s fiscal calendar, we have many more “urgent” deadlines in 2013. Yippee! That means the media will force feed us with congressmen from both sides who just keep talking but say nothing, not to mention what comes out of the administration!!
In any case, we have greatly tempered our enthusiasm for the stock market since last week and believe it’s now appropriate to protect and/or hedge the nice profits. That certainly does not mean that stocks must go down right here or at all, but we do see the risk/reward ratio as no longer in our favor.
Looking at the Dow, 15,100 seems like a good ceiling while 13,700 looks like a floor. I am concerned that Wall Street strategists are literally falling over themselves to be the most bullish, raising their price targets every week. The emerging markets complex (think China, Russia, Brazil, etc.) is down on the year and behaving poorly. The semiconductors, leaders in the tech sector, act heavy and want to drop more. High yield bonds have gone from leader to laggard.
On the flip side, I still see some bright spots like the Fed printing $85B a month, banks trading very well and the number of stocks going up and down on the New York Stock Exchange continuing to hit all time highs. And that’s why I am not becoming more negative over the intermediate and long-term, at least not yet.
Stocks are due for a rest between here, 14,600, and 15,100. Should it come, I will assess the pullback for any damage done and report back. This should not be the final nail in the bull market’s coffin.
Happy Passover and Easter to those celebrating!
Thank you Mother Nature for delivering another 2 feet of snow to Vermont last week! Some of us appreciate your fine work!!
Over the next two weeks, I will be visiting the Boston area as well as the east coast of Florida. Please let me know if you would like to grab coffee or an adult beverage!
The latest Street$marts has been posted!
After Friday’s reversal from early losses on the “news” regarding the Fiscal Cliff, the bulls put on an ole fashioned stampede today with more than 90% of the volume on the upside and almost 90% of all stocks closing higher. The market opened up and ran that way straight to the close, turning the short-term trend in favor of the bulls.
For the time being, the bulls have the ball and given the Thanksgiving holiday, they are supposed to keep control until next week. When markets first snap back off of a potential low, the sectors and stocks which were hit the hardest usually bounce back the hardest initially. On the index front, that’s the tech laden Nasdaq 100 and small cap Russell 2000. Sector wise, it’s software, telecom, banks, energy, industrials and biotech.
What would worry me is if this rally failed right away and fell to new lows. That would be a bad sign. Longer-term, I do not believe the lows we saw on Friday will end up being THE bottom, but this rally should be decent enough to enjoy.
It certainly took a while, but the bulls finally drew a line in the sand and defended their turf after a 9% pullback from the September peak. The day started out like many others during the decline with weakness to new lows. But after the “geniuses” in congress held a press conference and all agreed to compromise (Gee, what a word!), stocks lifted and ran higher into the close as monthly options expiration and short covering ahead of the weekend most likely helped the cause.
Keep an eye on everyone’s favorite or former favorite, Apple, as this stock has been hit with the ugly stick and will likely bounce hard when and if the overall market does.
Next week is a holiday shortened week that has a positive seasonal bias. I would look for the bulls to make some noise early.
Congratulations to President Barack Obama and all of the politicians who were elected by the American people last night. In the end, although my candidate did not win, Democracy was and is always the big winner. As you know, I hardly ever use the word “hope” when discussing investing, but in this case, I do hope we somehow see congress and the president at least genuinely attempt to work together on a bipartisan basis. I don’t know a single person who wants four more years like the last two in DC.
I am going to be on FOX Business’ Markets Now at 1:30pm est today discussing the election results and its impact on the stock market and economy.
In yesterday’s Street$marts, (http://www.investfortomorrow.com/newsletter/CurrentStreet$marts20121106.pdf) I made the case that an Obama victory would see market upside and a Romney victory would see weakness. And that whatever the move was, it should continue into next week. So what’s going on today and why the sea of red in the stock market and the Dow now under 13,000?
Stocks traded higher on Monday and Tuesday. Some say it was Romney, while others say it was Obama. To me, it’s irrelevant. You can see that last night from 5pm to 10pm, the S&P 500 futures (an indicator of the overall stock market) traded lower as the results were announced. After Obama achieved 270 electoral votes for reelection, the S&P 500 futures turned around and headed higher until almost 6am. So when I woke up and saw the green, I thought the market would open to the upside.
That was until the European Central Bank’s Mario Draghi made negative comments about Germany’s economy weakening. From there, the futures fell sharply straight to the U.S. open at 9:30am and have continued lower ever since. Was Obama’s reelection the cause of today’s carnage or was it the ECB? In the grand scheme, it doesn’t really matter, but given the weakness in the financials and materials and relative strength in consumer discretionary stocks, it certainly looks like Europe is the bigger driver than the election.
I would look for the weakness in stocks, on balance, to continue into next week before another attempt at a meaningful bottom begins for a year-end rally.
After Friday’s carnage, the bulls fought off early weakness and pushed stocks to close at their highs around the flat level. Is the decline over? Anything is possible, but I continue to see more downside ahead with all major indices breaking their recent lows. A pre-election low remains in the cards and that would really catch folks off guard!
I remember calling my parents from college when I heard the stock market had crashed 22.6% in a single day. My father had literally just opened another brokerage firm and even I knew this wouldn’t be good. I remember him telling me that it was the BEST time to open a new firm since they hadn’t brought clients over and built their book up yet. So not many folks were unhappy!
I remember a buddy of mine who traded for a living teaching me about how the whole financial system was broken. The stock market was not trading at the levels that the underlying derivatives suggested and the key providers of liquidity and stability were rendered impotent by this disconnect. The morning after the crash, my buddy showed me how the Dow should have been another few hundred points lower. It was at that moment, he dove in and bought with both hands, selling out by the next day for a year’s worth of gains.
Stocks fell hard on October 19, 2012, but nothing compared to 25 years ago. An equivalent decline would have been almost 3000 points today! Today’s carnage was interesting and I think there is more to come, even if we see a bounce first. A good buying opportunity is coming for those who are patient…