BestInvestIdea

The Earnings Season Party Ends

This last week was a volatile one for the markets, which witnessed the domestic equity markets down slightly overall for the week. The market was hesitant going into Wednesday’s Fed decision on monetary policy (which resulted in no change in interest rates), rallied, then gave it all back by Friday. While there is still another week or so of corporate earnings due out, there isn’t too much on the horizon in this seasonally slow period to get excited about. It seems that, with a market up 45% or so from its lows, it is easier to go on vacation at this point then to try to figure out which direction the market will take next. On the bullish side there is the incredible monetary stimulus, (slowly) improving economy, low inflation data (CPI data released today showing 0% inflation) and all the cash on the sidelines waiting for a chance to get back in the market. On the bearish side there is the fact that no historical period has seen a rally from a bear market low that was this strong in this short amount of time, the lack of a bottom in the housing market, rising unemployment and improved economic data that is largely due to inventory re-stocking and cost cutting rather than sustainable economic growth.

When investors come back after Labor Day and trading volume returns, we will see the true direction of markets. We continue to believe that equity markets will continue to climb the “wall of worry” and defy logic. However, we still believe that volatility will continue to increase, like we saw this week, as investors react and try to assign value to every new data point. We think another correction is due, and could have already begun, similar to what we saw in late June/early July. However, we would be buyers of the dip at this point as we believe sidelined cash will continue to want in, and the Fed/Administration will keep the stimulus and economic programs coming as long as it takes. With the seasonally volatile September/October period soon upon us, we are maintaining our conviction with our current holdings (see “portfolio and trades” category in the left hand column) and will wait to put more money to work until we see another correction.

These 5 ETFs Could Derail the Market's Momentum

The financials are over extended now and weakness there, from profit taking or true fundamental issues like commercial real estate, will be difficult to over-come by the broad market without the US dollar continuing its decent. For now (August?) the dollar should continue its fall but watch out when neither of the engines are running.

What's CNBC's Problem with Gold?

CNBC and the lot is just a show. They know one thing; buy stocks and hold 'em. Narrow and over produced. Showbiz, pure and simple.

The Dollar's Continued Decline: Unintended Consequences

Well said; the dollar is the risk to this whole thing and I am not as optimistic as you are about how it ends (next year). I agree with the conclusion and am also long gold, commodities and emerging markets equity. PS: excellent point regarding purchasing power.

Ryaz Shariff: Still Bullish on Commodities

Excellent overview from someone that obviously knows what they are talking about. I am in complete agreement with his supply/demand views as well as his longer-term outlook. We are expressing commodities via emerging market equity currently, as they have lead this recent move. However, we will be incrementally shifting to actual commodities soon as commodities have a number of advantages to the portfolio going forward. We are of the opinion that commodities will out-perform equities longer-term as the commodity cycle continues.

Important Support Levels for Gold in View

Interesting pattern indeed. Gold's big move last Friday was impressive, with the close above $950 significant. The overall head and shoulder pattern you show is consistent with our macro view; good investment environment for now with problems coming back soon to spoil the party. Gold will likely be north of $1,000 at that point, and headed higher.

High Yield Securities Need to Refresh

high yield continues higher, now fueled more on speculation rather than justifiable spread contraction. I would be taking profits from this group with the idea to buy back after a correction. High yield can be a great stock market indicator and so far it continues to give the all clear signal even though logic would indicate otherwise.

Time to Exit Oil / Gold Pair Trade

There is no justification for $70+ oil other than speculation. Just because we have had a bear market bounce doesn't mean we are off on a new bull run. With speculation running high, the low risk move today is to get defensive for a correction or more. This post is the correct move, but for more reasons than profit taking.

The Market is Pumped, Could a Dump Be on the Way?

Interesting indeed! I too think volatility is the name of the game next week due to poor volume and all this confusion action around the 200 MA. My guess of your 2 scenarios is #2; take out the shorts to get through the 200 MA. This is consistent with a June Swoon that is likely in the cards after 3 good months.

10 Top Hedge Funds' 10 Favorite Stocks: Astonishing Performance

Very interesting! Thank you for doing this work; anything to de-mystify hedge funds is a good thing for everyone. Its always surprising to me that hedge funds have so much of their returns explained by large cap, blue chip stocks.

PIMCO's Bill Gross Sees a Bleak Future

Bill is often seen as gloomy but the fact is that he and his group at Pimco do a lot more thinking and research about these things than 95% of the contributors of this great site. He is right that growth (upside) will be tempered by a number of macro factors. While we wont go the route of Japan of the 1990's, it will generally be more difficult to find return going forward. Within this back drop there will be better and worse times for investors. For a while longer we are in a "better time".