Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Five Market Trends to Watch in 2012

Stock-Markets / Financial Markets 2012 Jan 11, 2012 - 04:36 AM GMT

By: Jim_Farrish

Stock-Markets

The new year begins with a big question mark hanging overhead. The second half of 2011 left many investors weary of what to expect relative to the economy, Europe and other news. The outcome will be based on current trends playing out and new trends developing. Following these trends as they unfold, along with the opportunities they present will play an important role for investment results. The following are trends or potential trends to follow as we start 2012:


1)  Interest Rates - The current yield on the 10 year bond is 2%. While that seems low, in September the yield hit a low of 1.8% as the fear relative to Europe pushed money into safe haven investments. In 2011 many predicted that interest rates would rise along with the equity markets. The predictions were initially right as the yield moved to 3.73% in February. However, the issues in Europe had other plans, and as stated, they slowly eroded to the low as confidence evaporated. As we face another year of uncertainty the outlook is for yields to rise as the economy improves and stocks move higher. The first hurdle is a move above the 2% mark and then 2.2%. Watch for a trend reversal in the yield before jumping on the bandwagon to short treasury bonds. If the trend reverses, take advantage of the opportunity, but patience is key as it unfolds.

2) Europe - In reference to the comments in number one, this is the primary factor that will impact interest rates. However, it is also one of the key factors as to how stocks will perform. There are two issues to track relative to the improvement. First, refinancing the debt in the first quarter of billions in sovereign bonds from Germany, France, Spain and Italy. The key is to find the money at the same or lower interest rates. If this can be accomplished successfully it will go a long way to helping the confidence relative to Europe. Second, creation of a euro bond. Many are calling for this to provide liquidity and stability to the EU as the financial challenges are dealt with longer term. If the EU fails to establish this process it will produce some angst towards the situation longer term. Both are keys to watch looking forward.

3)  Real Estate - Will this unfold to be the year of the housing bounce? The data has gradually improved over the last three months and the expectations are for the improvements to continue. Watch the homebuilders as a benefactor of this progress. While the inventory issues relative to foreclosures and short sales remains a challenge, the builders have found demand in the $100-200k price level. There are improvements in parts of the US and the outlook is positive. Watch for this trend to improve and the sector along with it.

4)  Value Stocks - The dividend stocks have been one of the big predictions for 2012 on the upside. While I don't disagree with the rational or arguments in favor of these stocks, they need to find a catalyst for sustainable growth. Buying stocks for dividends alone is not a winning proposition, but in the current yield, environment it is a factor. The reality is in the trend. Looking at a chart of DVY, iShares DJ Select Dividend ETF the trend is moving up off the August low, but is stalled at resistance near the May 2011 high. Watch as this trend unfolds along with the catalyst to push the sector higher as the year unfolds.

5)  Earnings Growth - The projections for growth in earnings of the S&P 500 index is 10% for 2012. On the surface that sounds good, but the reality is they have been lowered in light of the global economic outlook. The trend to watch relative to earnings is a surprise to the upside. If they begin to trend higher and GDP growth is better than the 2.5% projected for the year it will provide a positive catalyst for the broad market. The first signs will come from the fourth quarter data to be released starting in the third week of January. Watch the trend and play accordingly the broad market indexes.

This promises to be a year of news, opportunity and disappointments. The ultimate direction of the broad markets will be driven by the trends that develop. Other issues or potential trend influences will come from the political arena with the presidential election providing more than we can ask or imagine. The central banks around the world will play a role in money supply or liquidity to the financial markets. Too much could result in inflation fears and too little could stall the progress in Europe's sovereign debt dilemma. The emerging markets will face food shortage issues and a stronger global economy will stir energy shortage issues. Bottom line... It is all about the trends that develop. These and more will be on our watch list as the year unfolds. Our focus in on finding the resulting investment and trading opportunities in each resulting trend.

Jim Farrish is the Founder and Editor of SectorExchange.com and TheETFexchange.com.  His primary goal is to educate people about investing.  He has taught workshops locally and nationally for over 25 years, teaching thousands of individuals, business owners, and advisors how to focus on achieving financial independence.  Jim Farrish is the CEO of Money Strategies, Inc., a Registered Investment Adviser with the SEC. The company and/or its clients may hold positions in the ETFs, mutual funds and/or index funds mentioned above. The commentary does not constitute individualized investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities. Investors who are interested in money management services may visit the Money Strategies, Inc., web site.

© 2012 Copyright Profit Confidential - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in