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Institutional Investors Portfolio Adjustments as Q2 Ends and Q3 Begins

Yesterday’s strength in the stock market was impressive, but not atypical in that it marked the last day institutional investors could sell stocks before the end of Q2. In addition, it came

Yesterday’s strength in the stock market was impressive, but not atypical in that it marked the last day institutional investors could sell stocks before the end of Q2. In addition, it came after a three-day weekend and a slow trading day Friday.

Institutions will likewise do some buying and selling today, since it is the first day of trading in Q3.

After a mixed open, expect another press higher.

I hold to my belief we are in a consolidation phase, characterized by sharp moves in both directions, as institutions continue to lock-in profits from the huge Sept. 2010 to May 2011 surge in the market and reinvest in new industry groups.

Brooksie’s Daily Stock Market blog: An edge before the market opens.

Wednesday, June 1, 2011 9:28 am EDT

DJIA: 12,569.74
S&P 500: 1345.20
Nasdaq Comp.: 2854.30
Russell 2000: 848.30

Additionally, money managers will have to digest some new negatives, namely foreign sovereign debt issues, a struggling economic recovery, and of course the dogfight in Congress over raising the nation’s debt limit, pursuant to a longer term plan to slash the nation’s expanding national debt.

There are enough uncertainties to keep a lid on the market in general, individual issues can of course outperform – a stock pickers’ market.

Failure to raise the debt limit leading to the U.S. default on certain obligations is unthinkable with disastrous consequences.

Common sense dictates, Congress will strike a compromise.

Expect the press to generate a fair amount of angst as we approach the August 2 deadline.

Expect a photo finish, right down to the wire.

What’s bullish is, the issue of a soaring national debt is finally being addressed.

George Brooks
[email protected]