I don’t know why, but I keep thinking back to 2007 when the indices kept rising even though it looked like the wheels had fallen off already. some individual stock leaders were declining but the indices climbed right up until late 2007. I had sold off most of my clients’ stock holdings some time before that (was a bit early) so I was feeling like I was missing the party! I’m not saying the economy looks as bad (and I’m not saying it doesn’t either:) but it’s just odd when the indices creep up but it just doesn’t feel good.
Today was one of those days when the indices held firm as various stocks swung up or down 1-3% – stocks with good growth prospects. I was a bit annoyed as I ended up selling a personal holding that wasn’t behaving well though I think it may reverse back up. Because it may just bounce back up I know I may be punching the desk in the near future:) but what can I do, I have heightened risk management.
VZ, MO, JNJ, WMT were all flat with the exception of Verizon which was down about 3/4%. The MLPs, shaking off fear a week ago (that I mentioned in my post) that more local gas discoveries on the east coast would mean less need for pipelines, resumed their upward move. The MLP’s are one part of my safety bond replacement trade, in addition to large dividend paying American companies). And if they strengthen, I fear the rest of the market may not – but that’s just a theory.
Tech Big Caps
I separate tech large caps from the others above just because they are behaving differently due to the fact that analysts think they have growth ahead of them. Intel is breaking out, Cisco and Microsoft were flat, but all three have moved nicely. That other large ‘tech’ company, the one that an analyst I respect accuses of engineering their numbers which I will not name, continues to rise to old resistance due to their monster 4% earnings increase and positive “guidance.” Basically tech has a bid – if you have good news of any kind, you’ll likely be rewarded. By the way, large cap tech, with their handsome dividends, are a subgroup of the bond replacements I mentioned above.
Not Waiting Around
Various small growth companies are trying to move up, some breakouts are working (like TSCO) others are not. Perhaps traders don’t trust this market and are taking 10-20% gains without waiting around to see what might develop.
Gold rose, the gold stocks were mixed with some trying to rise strongly. Mergers in this sector should accelerate as share prices of the juniors are down. Interestingly, gold is trying to make its way back to $1,700/oz. Silver broke up strongly on Friday and added to that today. Most gold miners have horrible chart patterns so if you want to trade long, you almost have to invent a pattern and force it.
My repeated advice to watch your risk management stands.
At the time of this writing, I or my clients own the following investments mentioned in this column: Gold, Silver, Altria, GDX,
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