If you look at the past six years you can't name a single moment when a reasonable person couldn't rattle off a list of reasons to sell out. And plenty of bears did rattle off a list. Truth is, there's always a "good" reason to sell. Doesn't make it right though. For the past six years all of those reasons have been wrong. Dead wrong.
But not every sector is playing nice. There are still some weak spots in this market you should avoid if you want to buy into this rally.
Your first rule for dealing with this directionless market is don't fight it. Don't get antsy. If the market's not giving you a green light don't hit the gas. Don't load up on any big bets right now - short or long.
I'm not writing biotech's obituary today. There's no way to predict exactly how far these stocks will retreat. But they are slowing down--and it looks like investors might be jumping off the bandwagon.
What happens when a flood of new money pours into an exchange? The rising tide lifts all boats. All that money flowing in causes stock prices to increase across the board. That's what's happening in China.
As Subramanian notes, “Wall Street sentiment is at bearish extremes with strategists recommending just a 52 percent stock allocation.” But she adds, “When investment strategists have been this bearish in the past, the S&P 500 rose 98% of the time, with average gains of 27%.”
Every recent market pullback--even the smaller ones--has telegraphed a major move higher for small-caps. And that's where we stand today. They're ready to sprint higher after a minor pullback.
We're coming out of the worst recession in decades. And stocks just recently hit new highs. Instead of freaking out about it, embrace it. Stocks have all kinds of room to run from here.
As Alcoa showed, getting booted from the Dow might be the best thing that can happen to a stock. Everyone and their mother-in-law hates AT&T right now. That means we'll be watching it once it's living in a box. It'll probably sell off at first. But we could soon get a screaming "buy" signal for an Alcoa-esque run. Can you say, contrarian?
It's not unprecedented for an index to take more than a decade to reclaim a previous high. The Dow Jones Industrial Average and S&P 500 each took 25 years to reach their heights of the 1929 boom