Market
Summary
The stock market remains in a long term
bullish trend as investors are discounting negative data and celebrating
positive news. The market is always somewhat disconnected from Main Street and
usually the market gets it right when reflecting future political and economic
events in current prices. Investors don't believe that the Federal
Reserve, White House and Congress are willing to take a chance on risking an
economic downturn any time soon. The market for now is telling us that employment
is growing at a decent pace in the private sector and the economy is
actually improving.
Investor
Analysis
With treasury bonds not supplying the returns
investors want, investors have few options other than putting money into
stocks. Take a look at the SPY ETF (Exchange Traded Fund) daily chart below. You
can easily see how the SPY ETF has been in a bullish uptrend all year along
with the broader stock market.
Possible Strategy
Invest in the SPY ETF to take advantage of broad-based stock market gains. The SPY is an exchange-traded fund (ETF) managed to track the Standard & Poor's 500 Index (S&P 500). The investment seeks to provide investment results that, before expenses, generally correspond to the price and yield performance of the S&P 500 Index. By trading like a stock, the SPY has continuous liquidity, can be short sold, bought on margin, provide regular dividend payments and incur regular brokerage commissions when traded. The SPY is used by large institutions and traders as bets on the overall direction of the market. They are also used by individual investors who believe in passive management (index investing). In this respect, spiders compete directly with S&P 500 index funds.
Smart investors looking to benefit from the stock market
recent price surge and limit the downside risk are stepping in to buy when
prices pull back a bit so that they can get shares at a cheaper price. One
theme that has been constant all year is investors waiting on price dips and
then stepping in to bid the prices back up. As highlighted in the chart above,
the major stock indexes are currently at a level where investors usually move
in to buy.
By Gregory Clay
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