Market Outlook
The bull market that began in March 2009 is on track to celebrate its sixth birthday early in 2015. As shown in the graph below, S&P 500 closed 2014 near its record high. The index hit records in more than 50 sessions throughout the year and ended its third straight year of double-digit percentage gains. The benchmark added 11.4 percent this year. The Dow Jones industrial average gained 7.5 percent including 38 all-time highs, and the Nasdaq Composite gained 13.4 percent for the year. U.S. stocks posting a third straight year of 10%-plus gains is the first time it has scored a performance hat trick of that magnitude since the last great bull market in the late 1990s. The graph below confirms U.S. government debt that matures in 20 years and beyond booked a 27 percent return. That is its biggest annual gain since 2011, when it generated a 33 percent return. All of this happened during a year in which interest rates were almost unanimously expected to rise.
Investor Analysis
The Santa Claus rally officially ends on Monday. Technically, all the major indexes are down during the Santa Claus rally which began the day before Christmas. Normally, during this week the S&P 500 posts an average gain of 1.5%. The failure of stocks to rally during this time tends to precede bear markets or times when stocks could be purchased at lower prices later in the year. But, some pundits claim the Santa Claus rally actually began a week earlier than normal when the Dow Jones Industrial Average gained more than 700 points in three days and the S&P 500 Index rallied 5%.
Notice that leading sectors a few months ago are now
lagging, such as Technology, Consumer Staples, and Healthcare. Also, after
crashing over the past month or so the Energy sector is no longer the biggest
loser and appears to have found a bottom. There should be opportunities to do
short term option trades on energy stocks and some readers are aware that a few
weeks ago we published a very profitable Energy ETF trade. The Technology
sector also may be oversold and now might be an opportune time to scan for high
momentum tech stocks that can generate a quick profit. Bidding on Cyclical and
Industrial stocks could be a good move because those sectors are popular this
time of year as the U.S. economy is strengthening.
By Gregory Clay
Investment Strategist
P.S. click on http://www.theoptionplayer.com/ to
sign up for a free option trading newsletter and follow theoptionplayer on Twitter
No comments:
Post a Comment