There is a heated debate in media where the markets are headed NOW.....
Loud media are predicting 50% retracement.....
Loud media is also predicting CRASH in financials.....
Louder media is saying "dont worry be happy".....
Before we analyze the above ...it is important to get a snapshot again as to where we have been and how it stands as of Friday the 8th...here are real stat since march Lows :
Dow 8574.65 UP 2104.70 or 32.53% in 44 days or 47.83 points every trading day.....
Nasdaq 1739 UP 473.48 or 37.41% in 44 days or 10.76 points every trading day......
S&P 500 929.23 UP 262.44 or 39.36% in 44 days or 5.96 points every trading day......
The above returns compares with .25% in money market funds where over $3+++ trillions are parked......
Now...tell me... how do you feel after looking @ stock market returns ...IF you are parked SAFELY in Money Market....because you were convinced by Fast Money/Mad Money who told you to take every cent out IF you need any money for next FIVE years???
I bet you feel like throwing UP.......
That is the REALITY of seeking financial wisdom from so-called commentators who keep CHANGING their tune every 5 minutes with no accountability......
So.... always try to come up with your OWN conclusions about matter of finance.....based on your OWN comfort level......
Comfort level varies from person to person based on your risk tolerance & age.....
So...if you feel that you need exposure to world of equity..few facts needs to be understood for all times :
Stocks do not go UP in straight line......there will be severe jolts along the way...which IS normal...
Stock prices always reflect economic reality for that industry or that particular stock....Do NOT bank on all boats being lifted...some boats do sink to lower values...a reality which cannot be escaped....
It is important to focus on stocks fundamentals first... then on technical health......
Knowing which sectors will be the first group to recover from current economic picture is CRITICAL to your making money......
Chasing speculative stocks without understanding them will hurt you in the long run.....remember trading/investing should be based on where you will finish a year from now NOT for next 5 days......
So... pick your strategy wisely & be comfortable with your focus.....
Now.....
About markets & where we MAY be in next 12 months.....???
I am of personal belief that next 12 months ...markets will be substantially higher??
WHY.....
Because in next 12 months world economic picture will be substantially better than current economic data.....Stock market acts as the leading indicator !!!!
So what is my GUESS..where each indices will be in next 12 months???
DOW 13,000
Nasdaq 2,500
S&P 500 1400
If you compare my GUESS to current closing numbers we are looking @ POTENTIAL GAIN of :
Dow + 4,425 points or another GAIN of 51.6%.......
Similar gains are expected of the other major indices.....
Now.... the more important point is.....are you going to capture those 52% gains or LAG the market or better yet...are you going to BEAT the market averages????
It all depends on your "homework"
Few suggestions which MAY keep you in the safe arena :
Do NOT chase speculative stocks......
Get rid of losing stocks quickly......
Stay diversified in many sectors.....
Stay with winners.....
Pay attention to RSI in your buying or selling decision....
Biggest % gains will be in leading stocks which have been beaten down due to economic environment.....
Some ETF MAY give you the returns without the headache of individual stock buying...some country ETF are a great way to keep your sanity while growing your money..like China,Brazil,India,even good old USA centric ETF.....
Please DO NOT indulge in 2X or 3X ETF...they are DISASTER for your financial health...they all should be "banned by SEC"...BUT as usual SEC is sleeping @ switch....
So...
Here we are as to all the pitfalls & HOW market really works.....
YES...there will be sharp & swift corrections along the way...BUT the TREND is UP if you look @ 12 months from now.....
Doing homework IS critical and ENSURE your OWN comfort level... as PUNDITS on CNBC change their mind or mislead you with a rosy picture all the time.....it is never an UP UP & AWAY market...it needs rest quite OFTEN......
Good luck with your OWN stock selection but remember..... stay DIVERSIFIED !!!!
BLOG does NOT give buy or sell.
Saleem
5 comments:
Hi Saleem,
Good blog report today. I'm feeling a pull back coming soon, but not just yet. The media clowns are going by the last recession market. There was a 2000 point rise then several years of sideways before climbing(it took time for investors to trust the market again) When the new "short ruling" is finally installed (hopefully not by short interests) and trust regained by the investors the market will rise quickly. So you're saying 13,000 on the DOW? Won't that be nice! I'm thinking a sweet trading range between 8000-10500, however I'm willing to readily accept your 13,000 :)
Best Regards
Hi Standards,
Thanks for your feedback.
Market is looking very healthy to me....thus a gradual rise to 13K in next 12 months....
Yes... there will be pause along the way which is a norm.
Stars are aligned....for everything to be in place to get us UP to much higher range.
Caution is always good for the market.
Saleem
Saleem,
Thanks for your time and dedication in writing a nice blog summary. Since reading your blog, I have changed my trading strategy that cost me a lot of money. Your guidance worked well. However, I did not follow it all the way, as I should. You encouraged buying when DJIA at around 6500 when most of analysis predicted the market would be down to 5000. I lost confident in the market and selling instead of buying. Anyway, I followed your direction and gained back some nice profits.
Since the market has been up nicely, now it is harder to get nice gain. What sector do you think lagged the market but having good potential and what sector still have more room to growth?
Michael
Hi Michael,
Thanks for your feedback.
It is always a "stockpickers market"
It is important to know stocks well before buying...so fundamental analysis is very important.....
There are strong stocks in every sector and weak ones also.
Once you follow about 50 stocks @ a time...then you will see that TAPE of some are moving UP while others are either flat or going down.....
As you can tell from my portfolio..I like Bulk dry shipping,Smartphone,Homebuilders,
Software,Comunication chip are in my focus right now.....which CHANGES with RSI monitoring....
Idea is to make money by swing trading as markets will remain volatile while trending UP....
Saleem
HEllo to all
So sorry that I did not put an introduction to the IBD listing--HD crashed on my iMac.
I get it back in a few days---yuk
As for the market--Hmm 50 -50 but this market has legs and I believe we go higher. The RSI in hte stocks I owe have a way to go.
Heck look at GE and FRO and DSX. Apple is way cheep and most oil driller still are.
Banking has yet to recover. their are trillions os bucks on the side lines--
I am so sorry about NVDa--I did not see it coming as I dod not with LVS--yet I held that Puppy because I could not count Las-Vegas out!
So I agree with Saleem that the market will go up
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