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.
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It was epic, for one day at least. I think it was the day he wrote this column.
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.
"After a month in which his re-election campaign picked up momentum, hard economic realities are about to hit President Barack Obama as he takes to the road on a campaign bus trip through the Rust Belt."
"Romney is spending the week at his $10 million lakeside New Hampshire vacation estate, which features a three-vessel boat garage and where he and his wife have been photographed skidding across the lake on their personal watercraft."
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.
not so fast there ajb ......
get with it and read up on tactical asset allocation and/or opportunistic allocation re-balancing or even trend-weighting strategies. ALL of these methods in the hands of trained professionals have outperformed the dead-as-a-doornail buy-and-hold strategy since 1999.
and out-performed big time. nothing wagered, nothing won sir, as you will lose out to inflation and taxes - talk about a zero-sum game.
This is just good news for the stocks we already own. Good time to get in, but still buy stocks that are giving good dividends and some growth.
Last week was the time to buy Apple at $560. Now it is at $600.00. People will be taking profits and the price will probably go back down again until October's IMac distribution.
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