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
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
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

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Bulls Should Be Careful Despite an Impressive January

Stock-Markets / Stock Markets 2013 Feb 05, 2013 - 05:34 PM GMT

By: Profit_Confidential

Stock-Markets

George Leong writes: It’s amazing how resilient the equities market has been in spite of the concerns toward the budgetary cuts and debt ceiling, the eurozone’s stalling and debt, and the earnings risk.

The current equities market has some bull legs; it could advance higher, driven by more encouraging earnings and economic news, which has been positive.


The U.S. equities market has been trending higher. About 75.1% of U.S. stocks are above their respective 200-day moving averages (MAs), versus 67.8% a month earlier. On a short-term basis, 82.1% are above their respective 50-day MAs, versus 80.4% a month earlier. A note of caution: only 67.2% of U.S. stocks are above their 20-day MAs, down from 86.2% a month earlier. This may signal a potential reversal or continued stalling in the equities market, based on my technical analysis.

The month of January was excellent for the equities market, with some impressive gains recorded in the blue chips and small-cap stocks, which bodes well for rest of the year, based on the “January effect.” In 1954, the S&P 500 advanced 5.1% in January and was up 45% when it closed for the year; albeit, there have also been some poor showings following a positive January. The S&P 500 has edged higher in the past three straight months, a best for it since 1987 (but you know what happened in October of that year). But be careful, as the S&P 500 may be approaching its third top, after its first top in 2000 and second top in 2007.

Chart courtesy of www.StockCharts.com

Take a look at the upward move of the S&P 500 stocks above the 200-day MA, which is over 87% as of January 31, versus the 47% level in mid-November. Be careful, as the pattern has been that stocks will inevitably move back toward their moving average.

Chart courtesy of www.StockCharts.com

The big winner in January was small-cap stocks, with the Russell 2000 blasting above 900 to a record historical high, up 6.2% in January. I still feel small-caps will outperform in the equities market this year, as long as the economy continues to show signs of growth (read “How to Supercharge Your Portfolio”); I recommend adding some of these stocks to help drive up the overall gains in your portfolio.

The chart of the Russell 2000 shows a breakout at the horizontal blue resistance line, coupled with rising relative strength and a moving average convergence/divergence (MACD), as shown by the blue circles on the chart.

Chart courtesy of www.StockCharts.com

Blue chips were the second best group in the equities market as some safe money moved to the stalwarts of the U.S. and global economies, when the Dow Jones Industrial Average advanced 4.8% in January.

The tech-laden NASDAQ was the worst performer in the equities market despite a 4.1% gain in January. But I continue to like technology as we move forward, especially those stocks with a focus on mobile.

One thing’s for sure: we know that the rate of the January advance in the equities market is clearly not sustainable, especially as we move into February. The November to April period has historically seen the biggest gains for the Dow and S&P 500, according to the Stock Trader’s Almanac. Technology has been better, with stocks advancing in eight months from November to June.

So, while the current market bias is bullish, you also need to be careful and make sure you take some money off the table. Better yet, have some put options in place.

George Leong, B.Comm.

http://www.profitconfidential.com

We publish Profit Confidential daily for our Lombardi Financial customers because we believe many of those reporting today’s financial news simply don’t know what they are telling you! Reporters are trained to tell you the news—not what it can mean for you! What you read in the popular news services, be it the daily newspapers, on the internet or TV, is the news from a “reporter’s opinion.” And there’s the big difference.

With Profit Confidential you are receiving the news with the opinions, commentaries and interpretations of seasoned financial analysts and economists. We analyze the actions of the stock market, precious metals, interest rates, real estate and other investments so we can tell you what we believe today’s financial news will mean for you tomorrow!

© 2013 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