The urge to add more stocks to one’s portfolio increases every day the press reports the market posted a new all-time high. Many investors still have money in bond funds where they sought a better return than they could get in money market funds.
Many still mostly on the sidelines watching in disbelief as the market defiantly climbs a wall of multiple worries over the years. Stupid? Cowardly? Not at all. Just humans being human. There was good reason to doubt the recovery that started four years ago following the worst recession/bear market since the 1930s when the world’s economies came within a smidge of a total meltdown.
So, did the late-comers miss the bull market? Well the broad-based S&P 500 is up 132% from its bear market intraday low, so yes, that much of it was missed, but with the benefit of hindsight, a major portion of that advance was from an extremely low level.
The market averages are now about at the level that they broke down on 2007, AND….we are not facing the unwinding of all those unthinkable adversities that decimated global economies and stock markets between 2007 and early 2009.
What’s more, we discovered we could go to the edge of ruin and survive, and emerge a stronger economy for it.
Problem free ?
No ! But much better off than before the crash.
Do I detect a trend toward less confrontation in Washington ? An effort by vastly differing ideologies to address issues ? Seems so, but mid-terms are not that far off and obstruction has become unpopular.
I see the possibility of the recent new high being one of many going forward, and reckless speculation in low-priced stocks running rampant as a the bull market eventually nears a peak.
It’s feel-good time ! Economic growth is steady with the potential for gaining traction. Global economies are beginning to recover, the U.S. corporation is flush with cash that will soon be spent on plant and equipment and hiring, and the price of homes is rebounding.
Do not get too cocky ! Don’t bet the ranch ! A technical correction often comes out of nowhere when buying stocks seems riskless. I’m talking correction, not bear market, the kind of 3% – 5% pullback that makes turns a hasty purchase into a loss that takes months to recoup.
Investor’s first read – an edge before the open
DJIA: 14,329.49
S&P 500: 1,544.26
Nasdaq Comp.: 3,232.08
Russell 2000: 934.57
Friday, March 8, 2013 (9.12 a.m.)
4 Years Ago – Headlines from Investor’s first read blogs
“Does the Cauldron of Fear Have to Boil Before This Market Turns” DJIA: 7,114 Feb 24, 2009
“When the Fear of Owning Stocks Turns to the Fear of Not Owning Stocks” DJIA: 7,350
Feb 25, 2009
“Big Money in the On-Deck Circle” DJIA: 7,270 , Feb 26, 2009
“Lock and Load” DJIA: 7,183, Feb 27, 2009
“9 Trillion Cash on Sidelines vs. $8 Trillion NYSE Market Value” DJIA: 7,062, Mar 2, 2009
“Ready….. Aim….” DJIA: 6,832 Mar. 2, 2009 SPECIAL BULLETIN (12:55P.M.)
“Big Money Reaching for the Bushell Basket” DJIA: 6,818, Mar. 3, 2009
“Once Off Sidelines, Big Money Good for a 1,500 – 2,000-point Rally” DJIA: 6,726 Mar 4, 2009
“Climactic Buy Possible by Tuesday” DJIA 6,875 Mar. 5, 2009
“Just Be Ready for a Big Buying Opportunity” DJIA: 6,626, Mar. 9, 2009
“Will Big Money Wait for the Numbers to Improve to Buy ?” DJIA 6,547, Mar. 10, 2009
“FIRE ! (BUY)” DJIA: 6,805 Mar. 10, 2009 SPECIAL BULLETIN (10:25 a.m.)
(Bear Market Ended March 9, 2009 down 55% (intraday) from the October 11, 2007 high).
APPLE (AAPL: $430.58) I kinda like what I saw yesterday. Volume could have been greater, but the action confirms there are buyers between $425 and $435. There has been a steady seller here since mid-February. A break above $442 improves the pattern, but it will take more to turn the stock bullish. I think a 39% beating is enough to discount a lot of adversities. What the Street needs is fewer gun slingers and more investors with a longer term perspective. At $700, it was overpriced, but for a leader in its industry with a S-load of cash this is overdone. At some point, value will be recognized. Can AAPL still sink below $400 ? Yes, but it is less likely now that money managers are scrambling to find stocks to buy. Clearly those who sold above $600, have got to be thinking of buying back in at these levels. Investors coming off the sidelines looking for ideas have got to find AAPL attractive. Granted, its growth rate is much less than in recent years, but this is still a powerhouse in its industry.
I am not long or short AAPL.
FACEBOOK (FB – $28.57) Monday, Tuesday and Wednesday were consolidation days with trading between $27.35 and $28.13. Sellers hit the stock in early trading in each of the last three days a little above $28. FB needed aggressive buying to sustain a move across $28 and got it with a gain of $1.13 on above average volume. $29 in the next hurdle, and a big one. It may have to punch away at it like it did with resistance at $28. Support is now $28.12.
I don’t own, nor have I ever owned FB.
ECONOMY:
This will be a heavy week for economic reports.
But the Street is heartened by favorable economic data on employment, personal income, consumer sentiment, auto sales construction spending, durable goods manufacturing, and housing.
I am going to list the economic reports below but will not include the numbers from the last report, since those numbers are often revised significantly and therefore are potentially misleading.
I strongly urge you to access the website: www.mam.econoday.com for detailed reports on this week’s calendar and an excellent recap (plus graphs) of last week’s reports. The site does a great job graphically illustrating key indicators.
FRIDAY:
Employment Situation (8:30)
Wholesale Trade (10:00)
George Brooks
“Investor’s first read – an edge before the open”
[email protected]
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The writer of Investor’s first read, George Brooks, is not registered as an investment advisor. Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. Readers are expected to assume full responsibility for conducting their own research pursuant to investment decisions in keeping with their tolerance for risk.
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