More upside predicted, said its "FULLY VALUED" and will get more expensive, said rates wont raise until 2011.
People are getting too excited about this continued market run, these same ones in now will be selling as soon as the last fools start buying, it always happens. Surprised people forget so quick about past collapses.
New Years Rally to Continueâfor Now
Published: Friday, 8 Jan 2010 | 8:28 PM ET
Text Size
By: Patti Domm
Executive Editor
Stocks swung higher into the new year and could continue an upward drift as the fourth-quarter earnings season gets going.
The first major Dow component, Alcoa [AA 17.02 0.41 (+2.47%) ], reports earnings Monday and there are just several more major namesâJPMorgan Chase [JPM 44.70 -0.09 (-0.2%) ] and Intel [INTC 20.83 0.23 (+1.12%) ]âreporting later in the week. Analysts expect corporate profits to mostly show improvement from last year's period, when the big deluge of earnings news starts after the middle of the month.
Most of the action in the week ahead will come from a heavy dose of economic reports, including December retail sales and the Fed's beige book on the economy. The Treasury also auctions another $80 plus billion in notes and bonds in the coming week.
The Dow gained 1.8 percent to 10,618 in the first week of 2010, while the S&P 500 rose 2.7 percent to 1144. There were some quiet days in the past week as the indices moved slightly, but markets saw heavy action under the surface as investors rotated fresh money into favored sectors. The big S&P sector winners: financials, materials, energy and technologyâall of them up more than 5 percent for the week.
"I think we start the year with a lot of momentum and move higher," said Jack Ablin, chief investment officer at Harris Private Bank. Ablin said he hates to admit it, but right now his view fits the consensus in that he sees the market moving higher through the first half before falling off later in the year.
Ablin pointed out that the S&P 500 in the past week was roughly 18 percent above its 200-day moving average. "We went back to 1926, and three-quarters of the time (the market was at that level), it moves higher over the next year and the average return is 16 percent. I would say we have had a running head start into 2010 with a lot of momentum," he said.
"It's going to take a market that is fully valued and turns it into an expensive market, and maybe in May or June, it will roll over and then we're going to sell, raise cash and get out," he said.
Ablin said he is still "pro cyclicals," since his first half view is positive. He likes financials, consumer discretionary, basic materials and technology. "My sense is the weaker dollar is ultimately going to help industrials, but I think the big surprise that people aren't really talking about is trade," he said. "...it is remarkable there's a chance we would see a positive trade balance through the course of the year."
He said earnings should see double-digit gains and could be a catalyst for stocks.
However, he said one issue that could disturb markets later in the year is the expected shortfall in state budgets. "June 30 is the fiscal year for all states. These states have spent this fiscal year expecting a certain revenue roll and they haven't gotten it," he said. Analysts also expect the growing federal budget deficit to become a bigger factor for markets and the wind-down of federal stimulus money.
"I don't think the Fed touches rates until 2011, but I do think a lot of this fiscal stimulus is going to start wearing off, and that's probably in the third quarter," he said.
But for now, stocks should keep making gains. "I just think we could still see a nice steady market...There's a lot of power to inertia, and that's what I'm going with," Ablin said. "I'm still overweight, even though I think we're full-valued." He said he does expect the rising market to eventually suck in the cash sidelined in money market funds and elsewhere.
"I think if the market surprises people to the upside, they'll keep jumping back in. It'll feed on itself, and once it turns, I'd rather sell first and ask questions later," he said.
People are getting too excited about this continued market run, these same ones in now will be selling as soon as the last fools start buying, it always happens. Surprised people forget so quick about past collapses.
New Years Rally to Continueâfor Now
Published: Friday, 8 Jan 2010 | 8:28 PM ET
Text Size
By: Patti Domm
Executive Editor
Stocks swung higher into the new year and could continue an upward drift as the fourth-quarter earnings season gets going.
The first major Dow component, Alcoa [AA 17.02 0.41 (+2.47%) ], reports earnings Monday and there are just several more major namesâJPMorgan Chase [JPM 44.70 -0.09 (-0.2%) ] and Intel [INTC 20.83 0.23 (+1.12%) ]âreporting later in the week. Analysts expect corporate profits to mostly show improvement from last year's period, when the big deluge of earnings news starts after the middle of the month.
Most of the action in the week ahead will come from a heavy dose of economic reports, including December retail sales and the Fed's beige book on the economy. The Treasury also auctions another $80 plus billion in notes and bonds in the coming week.
The Dow gained 1.8 percent to 10,618 in the first week of 2010, while the S&P 500 rose 2.7 percent to 1144. There were some quiet days in the past week as the indices moved slightly, but markets saw heavy action under the surface as investors rotated fresh money into favored sectors. The big S&P sector winners: financials, materials, energy and technologyâall of them up more than 5 percent for the week.
"I think we start the year with a lot of momentum and move higher," said Jack Ablin, chief investment officer at Harris Private Bank. Ablin said he hates to admit it, but right now his view fits the consensus in that he sees the market moving higher through the first half before falling off later in the year.
Ablin pointed out that the S&P 500 in the past week was roughly 18 percent above its 200-day moving average. "We went back to 1926, and three-quarters of the time (the market was at that level), it moves higher over the next year and the average return is 16 percent. I would say we have had a running head start into 2010 with a lot of momentum," he said.
"It's going to take a market that is fully valued and turns it into an expensive market, and maybe in May or June, it will roll over and then we're going to sell, raise cash and get out," he said.
Ablin said he is still "pro cyclicals," since his first half view is positive. He likes financials, consumer discretionary, basic materials and technology. "My sense is the weaker dollar is ultimately going to help industrials, but I think the big surprise that people aren't really talking about is trade," he said. "...it is remarkable there's a chance we would see a positive trade balance through the course of the year."
He said earnings should see double-digit gains and could be a catalyst for stocks.
However, he said one issue that could disturb markets later in the year is the expected shortfall in state budgets. "June 30 is the fiscal year for all states. These states have spent this fiscal year expecting a certain revenue roll and they haven't gotten it," he said. Analysts also expect the growing federal budget deficit to become a bigger factor for markets and the wind-down of federal stimulus money.
"I don't think the Fed touches rates until 2011, but I do think a lot of this fiscal stimulus is going to start wearing off, and that's probably in the third quarter," he said.
But for now, stocks should keep making gains. "I just think we could still see a nice steady market...There's a lot of power to inertia, and that's what I'm going with," Ablin said. "I'm still overweight, even though I think we're full-valued." He said he does expect the rising market to eventually suck in the cash sidelined in money market funds and elsewhere.
"I think if the market surprises people to the upside, they'll keep jumping back in. It'll feed on itself, and once it turns, I'd rather sell first and ask questions later," he said.