George Brooks: Deal - or No Deal?

George Brooks |

George Brooks equitesBrooksie’s Daily Stock Market blog
-an edge before the open

Friday, April 8, 2011 9:24 am EDT

DJIA: 12,409.49
S&P500: 1333.51
Nasdaq Comp.: 2796.14
Russell 2000:849.44

As noted yesterday, the market believes there will NOT be a shutdown in the government, as it persists in its upside bias, rebounding sharply Thursday from two sell offs.

Today: Rally at the open with a follow through dependent on mounting optimism (or not) of a deal out of Washington. Failure = 250 – 350 points down in the DJIA next week.

I think we can credit this month’s strength to the expectation of good Q1 earnings reports. I also think there will be some selling into those reports, especially in stocks that have had sharp 2011 run ups.

What does one do ?

Old readers here, know what I am about to say but for the benefit of new readers, let me suggest selling part of a position if you think there is a good chance of a stock going higher even though it has already had a big run.

It’s the same with being tormented about should you, or shouldn’t you, buy a stock. Why not take a partial position, then add to it when you are more sure you are right ?

I don’t see a bear market at this point. I do believe odds of a sharp correction are increasing. It would start as a 4% - 6% technical correction, but at the point where it would “technically” rebound, it gets clotheslined by unexpected news or commentary by someone with clout – the Fed, an economist, Wall Streeter, etc.

What was going to be a 5-percenter turns out to be a 9% - 12% correction during the summer.

The good news – potential for a juicy rally in Q4.

Will the Fed continue its stimulative stance beyond the end of its bond purchases in June ?

Opinions are mixed at the Fed, I don’t think they know one way or the other – YET. I think they are preparing to tighten the screws a bit, but still think commodity inflation is temporary

Remember - This is a “Pre-Presidential Election Year” – No losses in 72 years according to studies by the Stock Trader’s Almanac (STA). *

We are wrapping up a big run in the market that started in early September, two months ahead of the “Best Six Months” for investing (Nov.1 to May 1), also a study by the STA. Think and plan ahead, just in case !

George Brooks
sensiblesleuth@gmail.com

*Stock Trader’s Almanac – MUST have ! Got my first in 1968. As a matter of disclosure – I am “compted” it as a journalist and former writer for Yale Hirsch’s “Smart Money” (not same Smart Money today) in the 1970s – 1980s. Also published now is the “Commodity Trader’s Almanac.”
Check: http:/blog.stocktradersalmanac.com/

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
NEOP NeoProbe Corp. n/a n/a n/a 0

Comments

Emerging Growth

Star Navigation Systems Group Ltd.

Star Navigation Systems Group Ltd is engaged in the development, marketing and promotion of in-flight safety monitoring systems.

Private Markets

Snapchat

Snapchat is the fastest way to share a moment with friends. The mobile app, allows users to not only share photos with friends but also control how long they can…

XY Find It

Founded by serial entrepreneur Arie Trouw, XY Findables follows a single guiding principle: customers should never lose anything important again. With over 50,000 users around the world, more than 100,000…