S&P Beats 1500 As Dow Makes New High!
FUNDAMENTAL ANALYSISThe raging bulls continue to scale the mountains as S&P500 beat the 1500 point once again since late 2000 and the Dow made another new high of 13241.38. The economic data continues to paint an extremely optimistic picture of controlled inflation and steady growth. That, along with the great earnings so far, continues to fuel the bulls ahead. Initial claims have fallen also fallen to the lowest level of the year. Initial claims is an index that tracks the number of people filing first-time claims for state unemployment insurance. Investors use this index's four-week moving average to predict trends in the labor market. The lower the number of claims, the stronger the job market, and vice versa. The bull so far has been fed by great earnings, great data and great technicals and there may be more to come.
TECHNICAL ANALYSIS
Nothing very surpring today as the Dow inched up slightly, faithfully following the path of the staircase formation. There are no abnormalies in the move today and I would expect another 2 to 3 days more of such small, sideways days before we can determine if the Dow is bullish enough to form another step in the staircase formation.
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posted by Jason Ng at 6:37 PM
4 Comments:
The Dow is touching new highs and so is S&P.In this rising market it is important to know if the blue chip companies are going to be better or the Mid-caps.
In my opinion exports and foriegn operations of compaies is now going to matter. Given the economic conditions where dollar is constantly depreciating companies with higher proportions of income from abroad are going to benefit. Traditionally companies in the Dow make a lot of money outside the country because of their multinational operations.
Historically large caps have outperformed S&P by close to 15%. But in the last few years small caps were getting more attractive. This trend is now goin to change with MNC companies of DOW reporting higher earnings from abroad incomes.
So in my opinion the Dow should confrotabily beat the S&P, in future at least in earinings.
Totally agreed, Shikhil.
This earnings season was owned by companies with a lot of foriegn operations too, profiting from a weakening dollar.
Picking stocks in this market is a complex art, that is why I prefer to keep it simple by pursuing a hedged DIA position instead.
Please tell me more about the hedging strategy that you follow. And I completely agree with you regarding complexity of picking outperformer stocks compared to a diversified index like DOW.
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Please check out http://www.optiontradingpedia.com/hedging.htm for some of the techniques that I use. :)
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