It's time to buy everything
Epic upside breakouts are being seen across the risk spectrum -- in stocks, commodities and precious metals.
Well, this is fun. After months stuck in a sideways amble, the stock market is launching higher. Riskier, smaller stocks are doing better than larger, safer ones. So the Russell 2000 is hotter than the Dow Jones Industrial Average right now. And pharmaceuticals, financials, and foreign stocks are doing better than consumer staples and utilities.
But it's not just stocks that are launching higher. Crude oil is in the midst of its best four-day gain since the move out of last October's lows. Copper is having its best run since November. Gold and silver are on the move, too. High-yield bonds are pushing to new highs. For investors, it's time to buy everything that isn't bolted down as the "last gasp rally" I talked about in a recent column gets under way.
Everywhere I look, there are breakouts. The Russell 2000 has pushed over downtrend resistance, its 50-day moving average and its upper Bollinger band (a measure of volatility) as if they weren't even there. The S&P 500 has moved over its June high. The DB Commodities Tracking Index Fund (DBC) has moved over its 50-day average for the first time since January.
Even Apple (AAPL), that perennial market favorite, is on the move again as it jumps its multimonth trading range and initiates a new uptrend.
Catalysts? Last week's positive result from the eagerly awaited eurozone summit -- where Germany relaxed its opposition to using eurozone bailout funds to recapitalize banks and reduce Spanish and Italian borrowing costs from unsustainable levels -- set off a massive short-covering panic among hedge fund types as extreme short-euro, long-dollar trades were closed. I don't feel sorry for them.
Also contributing has been the steady increase in new stimulus measures from global central banks as they react to weakening economic fundamentals.
A weaker dollar has set off a chain-reaction bounce in dollar-sensitive assets. Crude oil tends to rise when the dollar falls. Emerging-market stocks tend to rise when the dollar falls. Same with gold, copper and other commodities. Just look at the way the iShares Emerging Markets (EEM) is effortlessly jumping its 200-day average for the first time since January.
How long will it last? I give it a few months before structural problems resurface, such as the looming fiscal cliff of tax hikes and spending cuts worth about 5% of GDP set to hit in early 2013.
How to play it? I've been telling my newsletter subscribers about, and focusing the Edge Letter Sample Portfolio on, contra-dollar assets like foreign stocks and commodities. But other areas of the market are now joining in, with financials a standout area of new strength. Synovus Financial (SNV) is already up more than 10% since I added it less than a week ago. The Direxion 3x Emerging Markets Bull (EDC) is up nearly 20% since I added it on June 6.
As of Tuesday, I'm adding Apple to my holdings.
Disclosure: Anthony has recommended DBC and SNV to his newsletter subscribers.
Check out Anthony's investment advisory service The Edge. A two-week free trial has been extended to MSN Money readers. Click here to sign up. Contact Anthony at email@example.com and follow him on Twitter at @EdgeLetter. You can view his current stock picks here. Feel free to comment below.
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Market analysts say buy, blackjack dealers say place your bets, and prostitutes say I love you baby.
They can’t help it, it’s just who they are and what they do.
uh huh...right...take this guy's advice and you may as well jump off the fiscal cliff too...he should get a trophy for top flip flopper...as bob dylan wrote, the answer is blowin in the wind...
Four or five days does not make a rally--unless you're talking about a sucker rally. Four or five days make a good "dead cat bounce", when ends once the short-sellers have covered and the suckers have followed behind them. Then the tap runs dry and the rally staggers.
I'm not saying I KNOW this will happen, but it is the most likely scenario. Watch the daily up-volumes and down-volumes on each up and down day--that will tell the story. If it continues rising but on lower and lower volumes, watch out below.
Today actually plays against what the Big boys are looking for. A little uptick is not what they want. They need some real gloom and doom so they can make the big play when the FED does another QE. Trading on news like car sales rising is what the retail guy does. These days, Institutions trade on news they create. Look for a big selloff to cash in on last week's gains. Then when it looks bad enough the FED will cave and we'll get another ridiculous runnup funded by newly printed money. That's where the real money will be made. Problem is, unless you have perfect timing, you will end up with no gain.
Maybe make up a story about Iran blocking the straits of Hormuz with one of their ski boats. That's a scary thought!
1. The sudden up trend is parabolic nearly all parabolic up trends are followed by severe downturns
2. . Europe hasn't fixed anything. Their recent dog and pony show was just that, and it will soon be seen as such.
3. There may be a black swan rising from the Straights of Hormuz.
4. Global trends are still slowing and are just now starting to show up in the U.S. data, lower earnings and many warnings are ahead.
The market is making a head fake here...careful out there.
Jamie is hoping the black cloud passes by him quickly - that JMP will be in better shape by the time the truth is exposed.
The sobering truth from Christine Lagarde's IMF update today is not this optimistic. I would be much more cautious. Also, if the whole truth about Greece's predicament actually makes it into US news this week, Greece's economy is showing major contraction with a long term unemployment rate of over 22%.
I think precious metals will bump up and down for the next 6 months, however, I doubt they will drop dramatically and are probably the safest bet.
The Dow has crawled back to almost 13,000 and Anthony is telling us to buy.
I call that fracking.
Yes, huge amounts of European money is pouring into U.S. markets and securities, but keep your powder dry. The Dow will go up with all that European money running for cover. It is not a sucker's rally, but walk softly and carry a big stick.
Wait until after the November elections and after all the dust has settled. Then buy real estate in Alabama. You know, where Airbus wants to set up a non-union shop.
Plans within plans within plans within plans.
What the hell happened to part two of the movie Atlas Shrugged? WE'RE WAITING!!!!
Good post carl ****. I look forward to buying you a cocktail someday soon.
That commie, Muslim, Baptist, Catholic, socialist, white, black, Latino, North Korean, Iranian, Martian, Plutonian, patriot, traitor, killer, pacifist, populist, poopy pants man, woman, dink, homeless, White House resident.
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[BRIEFING.COM] The stock market punctuated July with a broad-based retreat that sent the S&P 500 lower by 2.0% with all ten sectors ending in the red. The benchmark index posted a monthly decline of 1.5%, while the Russell 2000 (-2.3%) underperformed to end the month lower by 6.1%.
To get a better feel for what led to today's retreat, we'd like to look back to Wednesday, when the market had ample reason to rally, but did not. Instead, it ended basically flat after a sloppy day of ... More
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