Risk On!

Happy new year everyone! Hope your resolutions all come true!

Here are a few theses for today (I won’t spend a lot of time on these because theses for a day’s performance is more of a fun exercise than seriously useful work). Today’s performance might be attributed to:

1. all of the professional traders who were on vacation last week, decided the world would not end yet, and bought big today.

2. all of the amateur traders who were on vacation last week, decided…

3. some indices, including the S&P, broke above medium term resistance and signaled a buy to trend traders and risk management traders

4. general risk on – the famous risk on risk off trading style, where trades were either risk on (buy everything but the US dollar) or risk off (buy the US dollar) is back for a while.

5. With tax loss selling done, sellers were gone and only buyers were remaining

Interestingly, Verizon and Altria sold off today (notable in such a strong up move early on today). Perhaps a few folks sold to capture 2011 gains but pay taxes next year.

What was strongest was anything that was beaten down – gold, silver, cheap stocks, big tech like Google, and global growth ideas. One day does not make a market but it should not stop most people from investing with a good risk management plan in place.

For the grandmas I often mention who are searching for a “safe” yield (decent interest on money), keep searching as the only place you’ll find any yield is in the markets as the Fed continues its zero interest rate policy (ZIRP) which ensures that your bank account interest will be close to nil.

Intraday update…

market is about to close, Dow hasn’t overtaken the highs of the morning and it’s a mixed bag with some commodity/global growth stories ending strongly (like POT) and some other stocks giving back the entire day’s gains (some rather large gains evaporated). Agriculture looked strong today with not only Potash Corp but also the commodities themselves.

Not sure what it means (some traders aren’t so convinced this will last and other traders are buying ‘cheap” commodities?) but let’s keep watching…

At the time of this writing, I or my clients own the following investments mentioned in this column: Altria (MO), gold, silver

Note: this article is meant to be some helpful thoughts to share and not investment advice specific to you. Please consult your own advisor regarding investment and financial decisions. See our disclosures page