Strong Economic Numbers Fuel the Next Leg of the Rally. Look For A Grind Higher Next Week.

February 1, 2013
Author: Peter Stolcers, Founder of OneOption
Author
Pete

Here are 3 bullish stocks that we are trading in the Swing Reversal system. BAC, BAX and FCX. Thank you for your reviews.

My market analysis in January was spot on and I could not have called this week any better. I do not advertise on my site and I am motivated by your comments. Please take time to post your review of my blog on Investimonials. CLICK HERE I know it takes time out of your busy schedule so I will provide some incentive. My Swing Reversal system has been knocking the cover off of the ball and I know it will tigger some new trades this morning. If I get 5 new reviews, I will post the symbols at the top of this report. Check back to see the symbols. Thank you for posting your reviews it means a lot.

The market took a breather for a few days and it is back on track. The FOMC spooked investors and some still fear the great “unwind”. That is many months away and it should not stand in the way of this rally.

The sequester is a month away and the market has given politicians the benefit of the doubt recently. Investors did not worry about the fiscal cliff or the debt ceiling and optimism is running high. Most analysts believe that politicians will negotiate spending cuts.

Economic conditions are improving. The overnight PMI’s were good and they provided a positive backdrop this morning. In January, 157,000 new jobs were created and that was in line with expectations. Stocks rallied on the news and they got another good piece of information when the ISM manufacturing was posted. It came in at 53.1 versus estimates of 49.5.

Growth in China is back on track (GDP 8%), Europe is bouncing off of it economic trough and conditions in the US are gradually improving. Most analysts believe that we are coming out of an earnings/economic soft patch and they are willing to discount current numbers (like Q4 US GDP -.1%).

European credit concerns have subsided and the US debt ceiling has been extended. Fear as measured by option implied volatilities is at historic lows. Asset Managers are rotating out of fixed income and into equities.

Earnings have been decent and the focus is on Q1 guidance. The S&P 500 is attractively valued at a forward P/E of 13.

Now that all of the dark clouds have parted, I believe the market will make a new all-time high.

Central banks are printing money like mad and it is never wise to “fade the Fed”. Short sellers will not stand in the way of this freight train and under allocated Asset Managers will scramble to get long.

This market has plenty of room to run. I don’t see any obstacles for at least a few weeks.

Look for rotation and by calls on stocks that are breaking through horizontal resistance on good volume.

The economic news has been good and the calendar is light next week. Earnings season has past the halfway point and analysts have a sampling from all of the sectors/groups. This means the surprise element is small and stocks will continue to grind higher next week.

Buy calls.
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January 31, 2013

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