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
Walmart and Target have run rings around the S&P 500. Target's up almost 30%, while Walmart is up a cool 13%. The S&P inched ahead with a 6% gain over the same timeframe.
Even though the signs of the crash were obvious in hindsight, hardly anyone sold in early 2008. Why? Because traders were "flying" in clear skies. They didn't believe their instruments, which were flashing bright warning signs of bad weather ahead. And many crashed as a result...
None of the corrections we’ve experienced along the way to new highs have been “the big one” everyone’s warning you about. Sure, some of the dips may have left your heart in your stomach. But at the end of the day, the market’s bounced back. Every time. And the healthy pullbacks to support levels have been terrific buying opportunities.
Our friend David Stockman hails the god of price discovery after yesterday's Swiss monetary surprise. If you missed it, they delinked the Swiss franc from the Euro -- sending markets off on an erratic reel. Mr. Stockman fills you in on the details and opines why it's about time currency markets were alone...