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Married with Children. Started my career in 1982 with an investment banking firm, working a retail book of business. Licensing included General Principle and Registered Option Principle. In 1999 I went to work for myself Investing for a living. Interests include music (jazz, bluegrass, old... More
  • The Markets Have Finally Agreed, It's "Strawberry Fields Forever" 0 comments
    Mar 19, 2014 5:59 AM

    In the lyrics of this old strawberry song it was written "that it must be high or low". But Johnny never told us which. And the world's financial markets are even more elusive. Buy, sell or hold? Dare we say? Our biases are always our demise. Bulls angry at bears with even the mere mention of a meaningful sell-off, "it's bears just spreading self-serving evil propaganda". Bears thinking bulls are just mindless "Moonies" chasing the pipe dream. It's an argument older than dirt.

    It's enough to make one wonder, can we continue to drift higher and higher "where everything is easy with eyes closed". Looking to the technical and fundamentals of the markets there's a strong argument to be made for both sides, sure US companies have their war chests stuffed with record amounts of capital. The question is whether they'll ever invest it or cave in to the whims of the shareholder activists who want to pay it out in dividends. If the political climate continues to become more predictable we could see a flood gate of capex spending, which could easy prolong this bull market, albeit with a few healthy corrections along the way.

    But as always, trying to predict market direction is usually an exercise in futility, and currently the markets are only showing us contradictions and diversions. Year to date the S&P Utility sector is outperforming. The XLP (retail staples) is outperforming the XLY (discretionary sales). All bearish indicators in normal market conditions, normal being the operative word. Considering the Federal Reserve is currently in tapering mode, the most concerning YTD action is the long US Treasury Bond outperforming the S&P 500. I reckon that soon enough we'll know if any of this matters to this relentless bull market.

    Only one thing is for certain it will be high or low, and sooner than later I suspect. I'm going to buy some short-term volatility, maybe the TVIX.

    Mike Howell

    Disclosure: I am long QQQ, GILD, MSFT.

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