Sunday, 16 September 2012

FCM Market Update: Wall Street Blasts to New Highs

Stock Market Update

September 16, 2012

 Wall Street Blasts to New Highs : Bull market acting normal

Ebay, Amazon, Google, Walmart, and Merck hit new highs

 

Last week stocks and indexes saw a powerful rally as the Fed's most aggressive move in recent memory sparked confidence across Wall Street.  For 3 years I have said “Do not fight the Fed”.  They are determined to get the economy back on track and since 2008 this has been their goal.  Now we have housing stocks, large, mid and small cap stocks hitting new highs, real estate sector at new highs and even the banking stocks smashing new highs.     

The S&P 500 is shown above.  Notice the impressive break out this week to new highs as the highest volume in more than a month was recorded.  This is a sign the bull market is alive and well.  Short term it would be normal for the market to take a pause.  But long term 9 to 24 months the bull market will likely continue until the Fed starts tightening monetary policy.  

When I look at the weekly and monthly charts of key stocks and indexes I see this bull market just beginning.  If you did not read my July market report, “What I expect Long Term” please see attached file.  I detail many long term charts just now breaking to new highs.   So yes, prepare mentally for a consolidation but use any weakness to get invested.  The asset allocation for long term growth clients (12-24 months) continues to recommend 100% invested in growth sectors and stocks /ETFs.   

Google trades at over $700 a share, see above chart.  It has now made a return to levels reached in 2007.   The bear market in 2008  took many growth stocks down temporarily but many leaders have now roared back.  You can see during the hopelessness of the financial crisis what a value Google was at $250.  The bull market for three years has stair stepped higher and Google has also followed this pattern.  You can see the arrows showing the higher highs.  You can read my in-depth article on Google at my webpage,  http://www.freemancapital.net/articles/  “Google the King of Search”.  A projected target based on technical analysis is $1400/share once Google clears the 2007 high.


Summary: 

 

  • US stocks are up 16% Year to date. Very impressive considering Europe is a mess.
  • Large Cap US stocks continue to lead the market.
  • Growth is being rewarded over value stocks.
  • Technology, consumer discretion and financial are up 20%, 16 and 16% Year to Date. 
  • The Homebuilding sector ETFs have broken out to new highs and are up over 100% since Sept 2011.  This is a forward looking sign that the housing market is seeing some life starting to emerge. 
  • The S and P Banking index is also right at a new high. 
  • The bond market is overvalued compared to stocks, avoid bonds.
  • Apple and Google have broken out of bases and continue to hit new highs.  I mention these two stocks but there are many other stocks at new highs.   As I review stocks this weekend my screens are finding many new leadership stocks moving upward in trend channels and hitting new highs.
  • This bull market is alive and well and now we are seeing stocks start to emerge out of healthy bases.
  • Biogen, Flowser, ADS, and many internet related stocks are acting well.
  • History shows the bull market will continue until they begin tightening their monetary policy.  The opportunity to buy stocks and ETFs will remain until our asset model turns bearish and investor sentiment turns more euphoric. 
  • The average retail investor is not in the market yet as they wallow in fear.  Until they return and monetary policy remains the bull market will continue. 

 

I was recently asked how much longer to I expect stocks to move higher.    I will expect this bull market to continue upward for quite some time, this is based on inputs from the asset allocation model which is based on history not emotion.  Do not fight the Federal Reserve.  The US Fed is dedicated to moving the 8 trillion dollars sitting on the sidelines back into his economy.  They will do this by keeping rates low.   Short term it would be normal for the market to pause and refresh the “wall of worry” but looking out 12 months our asset allocation model remains bullish and I will be using weakness or “bad news” to invest remaining cash into growth stocks.   Client accounts remain diversified and invested in the strongest growth sectors.  


Thank you for reading.


Don Freeman
Freeman Capital Management,LLC
P: USA (503) 616-3850   I   Fax: (503) 914-1954    I   Thailand : +66 (0)89 970-5795
Skype:   Don.freeman1           www.freemancapital.net

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Sept 16,2012 Wall Street blasts to new highs.pdf Download this file

Google_the_king_of_search10162010.pdf Download this file

July 18,2012 What I expect long term 6 to36 months.pdf Download this file

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