Stock markets are moving up yes, but the R2M (revert to mean) trade of 2012 is beginning to tire out. I think it culminated today in Mastercard making up for its entire recent correction with a blast off response to good numbers.
Now we have many stocks that were dirt cheap already bounced back to price levels of previous support. What happens now? As I mentioned before, I think we need some amazing news from somewhere (as this is a news and outside force driven market) to make things move – a massive central bank stimulus, a new government debt…I mean spending program, or 400k new jobs – something like that.
A few stocks that we own have peaked in the past couple of days and fallen back from 2012 highs ( funny to say that after 33 days in the year). These stocks are up over 20%, have hit previous levels of support (now resistance) and are easing off. I am still leery of buying “breakouts” as I’d prefer a stock breaking through the 50 day or in a reversal since some breakouts get slapped back down.
Nonetheless, some stocks are bounding higher. Biotech stocks with good prospects are moving up strongly. Perhaps investors think the Big Pharma buying spree is going to really crank up or that biotechs are not economically sensitive. Whatever, who cares the reason as we could never really know – that sector is moving.
The dividend payers that I like to keep an eye on were all flat today and the large cap techs I watch are all resting after making recent highs for the year. Bonds did nothing either.
All in all, a market generally still waiting for news with individual issues having been better bets sop far than buying indices of the market, unless that index is something small cap.
At the time of this writing, I or my clients own the following investments mentioned in this column: none
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