5.21%
That climbing yield on the Ten Year is making the wall of worry more of a palisade of insurmountability. At 5.21% its caused the tone to get really bearish very quickly. Where are we headed?
In the greatest bull market, prices correct and the bull notion gets thrown in the garbage for a while. That is probably what is going on now. The underpinnings of this rally included high liquidity that financed the private equity led m&a boom. Higher rates cause dark shadows to come across the stage. Of course, the fact that the market rallied 11% in 11 weeks and 24% in 11 months is ignored. Markets are made of buyers and sellers and buyers have been in control for some time now. After a big run they often pause, rest, reassess, etc. That is what a correction really is - the maximum strength of the buyers is reached and sellers begin to dominate. If the bull case is still intact it won't be long before better prices cause the buyers to reassert themselves.
Another little point is that the correction set in the moment the S&P nicked the old high set in March 2000. One of my maxims of this market is to generally avoid stocks with overhead resistance. The market is dealing with overhead resistance now. Those waiting to breakeven are finally getting their due and that's part of the pressure on the market.
The decline will either stabilize here at the 50 day MA or go a little further towards the 200 day. My estimate is the decline falls within 1495 and 1460. The last month of the quarter can be a vacuum for good news. Most companies are on a calendar fiscal so there's not much for them to say at this point. If they pre-announce, pre-announcements tend to be bearish and they tend to come in the last month of the quarter.
Now is the time to go through the portfolios and clean up - eliminate dead wood, eliminate losers that are violating the stop loss range, prune winners, etc. Replace them with stocks that are behaving the way you'd want your stocks to behave in a correction - they are the ones that will likely lead the market higher. As the market corrects and rotates, there will also be new groups that come into play. It seems like the medical group is waking up will be part of the next crop of winners. Utilities, big winners the past year look like they are done for a while.
For further information contact info@gellercapital.com.
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this newsletter (article), will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Due to various factors, including changing market conditions, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter (article) serves as the receipt of, or as a substitute for, personalized investment advice from Geller Capital Management, LLC. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. A copy of our current written disclosure statement discussing our advisory services and fees is available for review upon request.
In the greatest bull market, prices correct and the bull notion gets thrown in the garbage for a while. That is probably what is going on now. The underpinnings of this rally included high liquidity that financed the private equity led m&a boom. Higher rates cause dark shadows to come across the stage. Of course, the fact that the market rallied 11% in 11 weeks and 24% in 11 months is ignored. Markets are made of buyers and sellers and buyers have been in control for some time now. After a big run they often pause, rest, reassess, etc. That is what a correction really is - the maximum strength of the buyers is reached and sellers begin to dominate. If the bull case is still intact it won't be long before better prices cause the buyers to reassert themselves.
Another little point is that the correction set in the moment the S&P nicked the old high set in March 2000. One of my maxims of this market is to generally avoid stocks with overhead resistance. The market is dealing with overhead resistance now. Those waiting to breakeven are finally getting their due and that's part of the pressure on the market.
The decline will either stabilize here at the 50 day MA or go a little further towards the 200 day. My estimate is the decline falls within 1495 and 1460. The last month of the quarter can be a vacuum for good news. Most companies are on a calendar fiscal so there's not much for them to say at this point. If they pre-announce, pre-announcements tend to be bearish and they tend to come in the last month of the quarter.
Now is the time to go through the portfolios and clean up - eliminate dead wood, eliminate losers that are violating the stop loss range, prune winners, etc. Replace them with stocks that are behaving the way you'd want your stocks to behave in a correction - they are the ones that will likely lead the market higher. As the market corrects and rotates, there will also be new groups that come into play. It seems like the medical group is waking up will be part of the next crop of winners. Utilities, big winners the past year look like they are done for a while.
For further information contact info@gellercapital.com.
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this newsletter (article), will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Due to various factors, including changing market conditions, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter (article) serves as the receipt of, or as a substitute for, personalized investment advice from Geller Capital Management, LLC. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. A copy of our current written disclosure statement discussing our advisory services and fees is available for review upon request.
posted by David Geller at 10:44 AM
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