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http://www.cnbc.com/id/46298151 i've doubt this is a 'new rally'. We are in the 3rd year of a 3-5 yrs rally. very difficult to play this market. Best to be safe than sorry... may tank out soon. I am speculative that this could be a multi year rally
got this from Financial advisor SPECIAL MARKET REPORT
February 2012
SHORT TERM VIBRATION:
It will be difficult for the markets to replicate their January performances in February. After sporting nearly a 7% gain in the first month of 2012, markets are due to take a breather. Because of this, investors should exercise caution in the near term.
During this recent market rally, the market has seen volatility diminish as well. Currently, the volatility index, which is used by many short term traders, suggests that there is a great deal of complacency in the stock market. The present level is measuring around 16, which is only four points off the all-time low measured a few years ago when the market peaked in 2007 before the big crash.
This does not suggest a big downturn is in store for the immediate future, but the likelihood of a measurable 5% or greater correction is extremely great. In other words, avoid chasing many of the stocks that have experienced parabolic jumps in this recent market spurt. Remain patient and allow the markets and stocks to settle in at more reasonable levels before taking positions.
Medium term:
The present strong market conditions have most money managers wanting to chase stocks in order to hit growth benchmarks. This has initially caused the quick burst seen in January. There is a distinct possibility that stocks will consolidate and potentially pullback in the near term. However, after stocks put in a healthy breather, they may be poised to push a little higher into the end of spring.
To take advantage of any more upside in this market may require that investors remain selective in what stocks they buy. Most of the big movers in the early part of 2012 were those stocks and sectors that underperformed woefully in 2011. Sectors such as alternative energy, financials and commodities have exhibited extreme strength so far.
Will that trend continue? It is a question that remains to be answered.
All markets are sitting near multi-year highs. Meanwhile, we have treasuries also yielding all-time lows. Bonds are in a bubble and gold is within striking distance of taking out all-time highs. This scenario poses an intriguing conundrum for all investors because it is extremely rare to see all asset classes sitting at such lofty levels.
In other words, something has got to give.
It would be premature to determine what asset classes will break down and which ones will soar even higher. Investors need to maintain a shorter time frame in holding any of these assets and be willing to trade out of them at the first signs of serious price depreciation. The current mood is suggesting long equities and short treasuries. However, this trade could reverse quickly by the end of the second quarter if Europe continues to stumble and the U.S. economy shows any serious hiccup in its recovery effort. This year the old adage "sell in May and go away" may turn out to be a worthwhile piece of advice worth following.
EXECUTIVE SUMMARY:
Short term indicators suggest equities will remain the place to be, but chasing most of these stocks at present levels may leave some investors being disappointed. If investors have a willingness to remain nimble and can exercise selectivity, the present market rally may continue to offer more gains in equities over the coming three months.
We believe having a defensive asset allocation in a majority of cash; with some selective fixed income, bonds and principle protected investment instruments may be prove to be a wise pose. This is what we would like to term capital preservation growth --- it is getting the most out of assets with the least amount of risk. This is a key strategy for us as we maintain the markets are at an inflection point as all asset classes are near unsustainable tops. Until it is clear which asset class or classes will emerge with more sustainable upside, we believe exercising caution, remaining nimble and diversifying risk is the way to navigate the present, turbulent investment waters.
If you would like to receive Monthly Market Newsletters from the Trader's Desk of Jason Shade, please feel free to sign up for free at www.wallstreetstraighttalk.com. You can also access my daily blogs and other complimentary special reports on my site as well. Thank you for your time and feel free to email me if you would like to discuss anything. [email protected]
Comments
SPECIAL MARKET REPORT
February 2012
SHORT TERM VIBRATION:
It will be difficult for the markets to replicate their January performances in February. After sporting nearly a 7% gain in the first month of 2012, markets are due to take a breather. Because of this, investors should exercise caution in the near term.
During this recent market rally, the market has seen volatility diminish as well. Currently, the volatility index, which is used by many short term traders, suggests that there is a great deal of complacency in the stock market. The present level is measuring around 16, which is only four points off the all-time low measured a few years ago when the market peaked in 2007 before the big crash.
This does not suggest a big downturn is in store for the immediate future, but the likelihood of a measurable 5% or greater correction is extremely great. In other words, avoid chasing many of the stocks that have experienced parabolic jumps in this recent market spurt. Remain patient and allow the markets and stocks to settle in at more reasonable levels before taking positions.
Medium term:
The present strong market conditions have most money managers wanting to chase stocks in order to hit growth benchmarks. This has initially caused the quick burst seen in January. There is a distinct possibility that stocks will consolidate and potentially pullback in the near term. However, after stocks put in a healthy breather, they may be poised to push a little higher into the end of spring.
To take advantage of any more upside in this market may require that investors remain selective in what stocks they buy. Most of the big movers in the early part of 2012 were those stocks and sectors that underperformed woefully in 2011. Sectors such as alternative energy, financials and commodities have exhibited extreme strength so far.
Will that trend continue? It is a question that remains to be answered.
All markets are sitting near multi-year highs. Meanwhile, we have treasuries also yielding all-time lows. Bonds are in a bubble and gold is within striking distance of taking out all-time highs. This scenario poses an intriguing conundrum for all investors because it is extremely rare to see all asset classes sitting at such lofty levels.
In other words, something has got to give.
It would be premature to determine what asset classes will break down and which ones will soar even higher. Investors need to maintain a shorter time frame in holding any of these assets and be willing to trade out of them at the first signs of serious price depreciation. The current mood is suggesting long equities and short treasuries. However, this trade could reverse quickly by the end of the second quarter if Europe continues to stumble and the U.S. economy shows any serious hiccup in its recovery effort. This year the old adage "sell in May and go away" may turn out to be a worthwhile piece of advice worth following.
EXECUTIVE SUMMARY:
Short term indicators suggest equities will remain the place to be, but chasing most of these stocks at present levels may leave some investors being disappointed. If investors have a willingness to remain nimble and can exercise selectivity, the present market rally may continue to offer more gains in equities over the coming three months.
We believe having a defensive asset allocation in a majority of cash; with some selective fixed income, bonds and principle protected investment instruments may be prove to be a wise pose. This is what we would like to term capital preservation growth --- it is getting the most out of assets with the least amount of risk. This is a key strategy for us as we maintain the markets are at an inflection point as all asset classes are near unsustainable tops. Until it is clear which asset class or classes will emerge with more sustainable upside, we believe exercising caution, remaining nimble and diversifying risk is the way to navigate the present, turbulent investment waters.
If you would like to receive Monthly Market Newsletters from the Trader's Desk of Jason Shade, please feel free to sign up for free at www.wallstreetstraighttalk.com. You can also access my daily blogs and other complimentary special reports on my site as well. Thank you for your time and feel free to email me if you would like to discuss anything. [email protected]
Best Regards,
Jason Shade, Financial Advisor
Director of Portfolio Management
Barrington Financial Advisors, Inc,