This has been one of the most volatile years in equities and commodities that I have seen in quite some time and I can only hope that the month of December brings some stability to the marketplace. The S&P 500 is up almost 10% so far this year but not before we have witnessed plunges of 16% with rebounds of 9% and that is just since April , whew not for the faint of heart. Even if you are a long term investor these types of market extremes are not easy to endure. As the year winds down the $million dollar question now is, are stocks overvalued? While corporate profits as a whole have been very impressive this year and 2011 portends to be another growth year for corporate earnings, one has to ask have the markets gotten ahead of itself? My view is as long as their are concerns about the economy, the housing market and Europe we will continue to see volatility in equities and in some instances extreme volatility. However I continue to expect support on pullbacks and healthy corrections which has been the pattern for most of the year.

Have a great week.

~George

Once again equities were very resilient today with the Dow coming back from down almost 150 points to closing only slightly lower along with the S&P 500.  The Nasdaq actually posting a modest gain up 13.90 for the day. I don’t expect to see too many fireworks this holiday shortened trading week, however with the inherent light volumes that are associated with the holiday period some volatility can occur. Good luck to all.

I wish everyone a very safe and happy Thanksgiving holiday.

All the best,

~George

In the midst of Tuesday’s sell-off and after the S&P 500 broke through the 1173 support line the markets came off their lows yesterday, albeit most indexes still managed to close the day down approximately 2%. Once again buyers came in today with continued support as the S&P 500 eked out a gain even as the flood of negative global economic and market driven news from China to Ireland makes headlines. One must expect that the flow of negative news will continue along with pockets of positive headlines. This most likely will create more volatility in equities which could create “select” opportunities, keyword select.

Market technicians will continue to be watchful of key support levels as the Dow, Nasdaq and S&P 500 are trading in between their 50 and 200 day moving averages. If indeed one chooses to take advantage of these market retracements it is always good practice to apply the “scale in” approach a.k.a. don’t buy all at once.

Have a good evening.

~George

Equities experienced a modest pullback last week with most of the averages giving up 2% or so. Holding true to form buyers stepped in today offering support although stocks closed off their highs. Some pundits might point to the strong October retail sales report released this morning with a reading of 1.2% which was nearly double the increase expected. I think that helped a bit and certainly if the consumer can begin to demonstrate strength on a consistent basis this would bode very well for the market going forward.

I still believe the main reason equities will continue to be met with support when the markets do indeed retreat is when you have the Fed as your partner stepping into the marketplace as they have, couple that with the continuing record low interests rates that exist, it’s no wonder we have the floor that we do. Having said this, this type of market support cannot go on forever and at some point the Fed must hand the baton over to true capitalism in order to have an environment that is real and sustainable. The $million dollar question is when will this occur? Well Washington it’s time to get to work on the economic and tax policies at hand (aka don’t raise taxes) to get this country and it’s business leaders confident to start expanding and hiring in a meaningful way, it could indeed be as simple as that. 🙂

Have a healthy and prosperous week.

~George

I suppose when John Chambers talks people listen? Cisco Systems, Inc. (NasdaqGS: CSCO) reported their fiscal first quarter earnings which ended October 30th with an 8% rise in profits on almost 20% revenue growth. Not too bad, in fact very impressive but the company’s CEO John Chambers warned about slower growth over the upcoming quarters which brought about concerns for overall IT spending. That was enough to send not only Cisco lower, but most of the major indexes as well.

In my previous posts I have eluded to the inevitable pullbacks that will occur in equities during this incessant bull run and that it would create “scale-in” entry points in certain sectors. Key phrase “scale-in” for this could be the first of many pullbacks as the market digests future economic, political and corporate developments.

In closing, to all veterans and those serving our country, thank you for your service and for protecting our freedom.

Sincerely,

~George

Not only did the major indexes close the week at 2 year highs, small-cap and micro-cap speculation is picking up. Even the most riskiest assets, pre-revenue early stage companies that trade on the OTC Bulletin Board are beginning to show an increase in volumes. Now this is a metric that most industry pundits do not consider but I certainly keep it on my radar. For if investors begin to warm up to the most riskiest asset classes then what does this mean for the mid to large-caps? Historically it bodes well. This doesn’t mean to go out and start speculating across the board, however for me this is just another confirmation that this bull run we have been on has more to go. I definitely expect pullbacks along the way and will certainly be prepared for them.

Have a great week and good luck to all.

~George

Stock indexes soared to multi-year highs today as the federal reserve announces a $600 billion dollar bond buying spree. This stimulus action will most certainly provide significant support for the markets and was the main reason why we saw global equity strength across the board. Also today the S & P 500 broke through the psychological mark of 1200 to close at 1221, yet another bullish case for stocks.

So how does one capitalize now on equities? In this accommodative environment courtesy of the federal reserve, I would expect that when the markets do pullback this would be the opportune time to put capital to work. Even if the markets had a correction of 5-10%, the floor that the feds have put in with a $75 billion a month bond buying spree and interest rates kept near zero, these two factors alone is giving this perma-bull all the confidence needed to put capital to work.

Good luck to all 🙂

~George

Congratulations to America for speaking out yesterday at the polls and for taking the first step in holding Washington accountable for their actions. No matter what side of the aisle you are on, these historic mid-terms have put Congress on alert and that warning is to start genuinely representing the people or else!

Now that the elections are over what will the markets focus on? One matter for sure is whether or not the Bush tax cuts will be extended. I think both U.S. equities and corporate America need clarity across the board with not only tax issues, but for all economic policies in order for real confidence to occur. Also I think U.S. equities will continue to lift if going forward corporate earnings can demonstrate top-line growth. Yes so far earnings this year have been impressive however those results for the most part have come from better efficiencies, higher productivity and cost cutting measures. I think when top-line growth begins, the markets reaction could catch everyone off guard.

Have a great day…

~George