I was fortunate enough to be on Fox Business News with Liz Claman’s on Countdown. She was pretty excited about the cash S&P making new all time highs. 1850 cash is a big psychological level. Nothing unusual there. Financial Anchors know that America loves a bullish story. Its always nice to feel good about new highs. Viewers like it ; therefore advertisers like it.
The panic low in 2009 was 666. Triple that and you get 1998. IF we are able to take out 1850, that would be my upside target. A triple would pull any remaining bears out of hibernation and then make them ripe for the downside correction. Market timers tend to get out at the bottoms and get back in at tops. “Come on in, the water’s fine”. This is usually followed by someone cueing the theme from Jaws. Then the fun begins.
6500 was the low in the Dow. A triple there gets us to 19,500. with the Dow sitting here at 16,500, is another 3k points possible? Percentage wise, its an 18% gain from 16,500. 2013 just witnessed a 30% return, so on the scale of possibilities, its not that far fetched.
Aside from the TV anchors, who, lets face it, love a bull market, there continue to be a lot of professionals talking about why “this shouldn’t be happening”. This being stocks on a holy tear, in the face of the myriad of potential negatives out there.
Indeed, we continue to climb the wall of worry. While it may be a bumpy ride up to those levels, (and lets face it– we may never see those upside targets this year), I think until we get the 10% correction every one’s be pining away for, we might just continue to grind higher.
A lot of folks are looking for a 10% pull back so they can get long. Time will tell if we get that or not.
For now, it looks like the cash S&P is cresting here at 1850. If we can pop above it, 1850 might be the floor for 2014. If we fail here repeatedly, maybe the “correction crowd” will get their wish.
To pretend to know which way we’ll go is , in my opinion, hubris. All I like doing is trying to go w/ the trend. Break higher o break lower, I’ll try to catch the next wave.
If you are long stocks w/ an IRA, don’t even bother to look at it. The most I’d do is spend some $$ on some mini puts. A mini contract protects 80 to 90K worth of long stock positions.
If you made 30% last year, and want to protect those longs, yet stay long with out getting in and getting out of the market, then stay long but utilize put options to cover your self on a quarter to quarter basis. Spend a little dough to protect what you have. Be willing to lose the put premium. Hope stocks head for those upper targets.
But if we have a flush, you’re put options will let you sleep better at night.
That’s hard to do if we have a break and every one on TV and in the Press is harping about “disaster” or “how low can we go”, type hysteria.
If you have your puts on, you can turn down the volume and know that, since you were pro-active, you don’t have to wonder when or where the bottom will be, in case we do have that correction.
By the way, Right now, March Dow futures are trading at 16341, yesterday’s high bounced off of 16444. That’s 100 pt cushion if you got short yesterday . AS for March S&P futures? Yesterday’s high was 1843. It couldn’t take out the old high tick at 1846. So cash made a new high, but futures didn’t? March S&P futures are at 1837 here and now, 10 handles away from the holy grail, which is the record high posted on 12/31/13.
CER