Why it's time to sell

After a run to new record highs, stocks look set to weaken despite a strengthening global economy. Blame the yen.

By Anthony Mirhaydari Aug 7, 2013 2:26PM

Stock market copyright ComstockSince late June, I've been saying stocks are headed for new record highs. I thought we'd see Dow 16,000, but I'll settle for 1,700 on the S&P 500. And accompanying the rise has been a turnaround in the economic data as countries around the world -- China, the United Kingdom, even Spain -- are showing renewed signs of vigor.

 

Yet over the last few days, a wave of selling pressure has washed over the market. Many technical indicators are now flashing red -- suggesting a correction lies ahead.

 

On the surface, this seems odd. Europe is exiting its recession, the Chinese are easing up on their credit constraints, and U.S. GDP growth is poised to reaccelerate past a 2% annual rate again thanks to Monday's narrower-than-expected trade deficit. So what's the problem?

 

Most pin the blame on fears the Federal Reserve will taper their open ended $85 billion-a-month bond buying stimulus by $10 or $20 billion next month. This would come in response to a strengthening economy and comments by normally stimulus happy officials that indeed, now is the time to take a step back.

 

 

Surely, this is playing a role. And it's disappointing to see Wall Street worry more about an ever-so-slight reduction in Fed stimulus than what is developing into the best global economic tailwinds since 2011. 

 

 

The larger factor, I believe, has been the emergence of the Japanese yen from a consolidation pattern that dates back to April. Stay with me here. Making sense of the currency markets is enough to make even Wall Street veterans go cross-eyed. So I can't tell you what's driving the move.

 

 

All I can tell you is that this is a big deal since "yen carry trades" -- or bets against the yen that funded stock purchases and other investments -- has been one of the primary drivers of stocks all year. Now that it's reversing, hedge fund types are selling their investments, buying the yen, and closing the trade. The faster the yen rises, the faster the trades will need to be closed which in turn will bolster the yen more.

 

 

Japanese stocks are suffering the most right now, since a stronger yen reduces export competitiveness. As a result, I am adding short positions in Sony (SNE) and Sumitomo Mitsui Financial (SMFG) to my Edge Letter Sample Portfolio. Emerging market stocks also look weak, so I'm adding the ProShares UltraShort Emerging Markets (EEV). I've also sold my existing long positions.

 

For more conservative investors, consider booking profits and raising some cash here.

 

Check out Anthony's new investment newsletter, the Edge, and his money management service, Mirhaydari Capital Management. A two-week free trial has been extended to MSN Money readers. Click the link above to sign up. Mirhaydari can be contacted at anthony@edgeletter.c​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​om​​​​​​​​​​​​​​​​​ and followed on Twitter at @EdgeLetter. You can view his current stock picks here. Feel free to comment below.


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125Comments
Aug 7, 2013 2:45PM
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This guy seems to write articles with a day-trader mentality.  He has zero credibility and I'm surprised he is given a forum for his non-sense.  If he is an investor, he must have some agenda.  No investor changes his outlook as quickly as this guy does.  Wherever the trend is for the week, there is Mirhaydari following the trend.  Useless and shameless!
Aug 7, 2013 2:46PM
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Time for a little "Cut and Paste" action.....

 

Here's Anthony's opening statement today:

"Since late June, I've been saying stocks are headed for new record highs."

 

Here is Anthony's headline from June 21st. (where I come from, that's late June)

"Market optimism unravels" The bulls are reeling as everything that could go wrong did go wrong this week. And it's not just about the Fed"

 

Anthony is a speculator pure and simple.  If you are reading his articles for investment advice, you are making a massive mistake.

 

I read his articles for the same reasons people watch the Kardashians.  Mindless entertainment.

 
Aug 7, 2013 2:54PM
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No matter what the market does in the next 90 days, Anthony has set himself up to say, "see, I told you so!" 
Aug 7, 2013 3:01PM
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How does this guy sleep with himself??  His articles are a comedy act.  Following his advice is why people overdose on sleeping pills.  Hey Anthony, remember the "SKY IS FALLING" prognosis of yours all fall/spring/summer? 

I really wonder if he's married to someone's daughter at MSN.  He's awful.  AWFUL! 

Aug 7, 2013 3:11PM
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This guy wrote an article just last week and said that now was the time to buy, wtf?
Aug 7, 2013 2:54PM
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Wrong Way Tony just sent a strong buy signal.
Aug 7, 2013 2:33PM
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It's also time for the Federal Reserve to STOP PUMPING OUR TAX DOLLARS into the Wall Street Welfare for the top 1%.  
Aug 7, 2013 2:57PM
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I started reading MSN Money in January 2012, I like the 10 year overviews on stocks and it used to be possible to see charts going back decades. 

The first article I read was Anthony Mirhaydari saying Sell. Then later Buy, then Sell. It seems he should get it right at least 50% of the time....

One thing is for sure, brokers who earn commissions every time you buy or sell, must love this guy.
Aug 7, 2013 2:41PM
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Tony seems to be turning back around. Scary being a Bull huh Tony. I kinda knew it could not last very long.
Aug 7, 2013 3:11PM
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This guy is a legend in his own mind.  If anything, I'm willing to buy since he posted that it's time to sell!
Aug 7, 2013 2:44PM
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Strange times we live in...economy on life support, stocks go up to record levels...economy looks like it might start getting some legs (sort of)...stocks go flat or retreat. I guess fundimentals must be out of fashion...I guess the central banks are the conductor of the stock market orchestra 
Aug 7, 2013 3:38PM
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When market is down

Anthony comes to town

Touting his charts and graphs

Spreads gloom and doom like a clown

Aug 7, 2013 3:12PM
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I think this guy needs an appropriate nickname, something like.......Rollercoaster Man.

Aug 7, 2013 3:25PM
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"Meerkat" Mirhaydari pops up again after last recommending we go all-in and pushing stock choices on us he now returns to his short-selling ways with another SELL EVERYTHING article which is typical of the idiots at MSN MONEY. What he is not telling you is all the volatility the last few days was caused by 2 rogue members of the Federal Reserve Board of Governors who want tapering to end and are biased. Bernanke is the real authority. If Bernanke says no tapering, this market will keep going up and Mirhaydari will be wrong again. Wait for Bernanke to speak. 
Aug 7, 2013 2:55PM
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Nothing more than late summer doldrums before we gear up for a stretch run at year-end.
Aug 7, 2013 3:42PM
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I have tried to be positive and not bash you Anthony but look this economy is struggling even with 2 trillion in debt per year.  Who with a pulse can believe we are headed anywhere but to a Central American type Economy.  10% will own 90%.  It is already baked in the cake. Talk about how free trade and globalizaion have decimated our tax base, our childrens working careers and our old folks not making a dime off their savings.  Talk about the massive amounts of money the Internationals have amassed while doing the dirty work to our citizens while the politicians and fat cats eat cake.  Talk about something that will correct and add to the mix for everyone.  Mostly Tony get hooked up as an American and think about contributing something to make this a better place to invest.  PLEASE

Aug 7, 2013 2:47PM
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It's also time to get rid of The Federal Reserve which is no more Federal than Federal Express...they are a private banking cartel printing monopoly money and does nothing but ruin our economy and keep americans in perpetual debt.
Aug 7, 2013 3:22PM
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Has this guy ever said one positive thing about the market. What an idiot!
Aug 7, 2013 3:01PM
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Yea, right when the economy is starting to recover. Bear
Aug 7, 2013 3:26PM
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"Strengthening Global economy' ????  What freaking planet do you live on, Anthony!!  lol

Really, you and all your paid market shill buddies are absolutely clueless about reality. You see the propped up FED 'Benny Bucks' fueled 'rally' and think we are in a 'recovery'??? Wow. wishful thinking I guess.  I bet you even believe the Oboob administration lies, swindles, disinformation and manipulated stats, too, don't you? This crash is gonna hit you like a ton of bricks, buddy. Enjoy the ride!

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