Market outlook for March 13th: More of the same!

I know, no one believes the rally just as I predicted but it is true. In overnight trading the Nikkei is up over 350 points at 10:00pm PST. The Put to Call ratio settled in and closed at 0.71 today. The VIX has also dropped and closed at 41.18 and the Dow closed up today to 7,170 and the S&P 500 closed over the critical 740 resistance level closing at 751. Both the Dow and S&P closed over their 20 day Moving average. This was a very good day. TNA was up about 18% today, closing at $14.50, while SSO closed at $17.79. Ford closed at $2.10 and Apple closed at $96.35/share. The best thing about today were the skeptics. Most believe this will end shortly and no one believes we are headed to over 8,000. A close friend, Tom, asked me today, whether I thought this rally will settle down and regress in a week or so, or slowly advance over the next few months? My answer was this, "I ams not a prophet. Just enjoy the ride. I like the steadiness of it (the rally). Most say it isn't for real (and my guess are sitting on the sidelines). That is why I like it as it may prove them all wrong."

Friday is "Friday the 13th" and while it is usually a superstitious time, I am hoping we prove it wrong. I could expect a slight pullback going into the weekend but you must be impressed at the Volume these past 3 days. If the market does pull back tomorrow, I would use the pullback to add to positions in financials and the stocks and ETF's I have been pursuing. Happy Friday.

Market outlook: Now what?

The stock market pulled back today. The Dow closed at 8,149, the Nasdaq at 1,507 and the S&P 500 at 845. And while the pullback seemed strong, the volume was lower than yesterday's volume. The big question for me is, Now what? I still own all my shares of the ETF's TNA and SSO and did not sell any. If the market drops back down to the 7,900 level I will add more shares. If it goes back up I will wait to sell when the market is close to the upper bands of the range. For the Dow that would be 7,300 to 9,300 and for the S&P 500 that would be from 750 to 950.

It seems that from the run-up to the Stimulus package being approved yesterday by the House of Representatives, the market was rising. But as soon as the vote was in where not one Republican voted for the Bill, the market started to pullback. Much of the discourse by Republican leaders is that the package is not going to stimulate the economy, which has sewn doubts about its effectiveness in the general public. As I said in an earlier post, was it necessary to get a compromise in this package between Republicans and Democrats in a watered down version of a Bill that both sides would lose something or should the Democrats go it alone. It seems that the republicans left in Congress have decided that they have a better chance at personal survival by opposing the Bill, than by supporting it. It's the old Washington at work. Democrats too have used their recent gains at the polls for guaranteeing that the old politics is played out. Nancy Pellosi is at the heart of this old politic on the Democratic side. President Obama has his hands full here.

Surprised by today's market action

Yes, I was surprised by the market action today. With so many layoffs and missed earnings by Caterpillar, I thought the market would take a step down. Volume was lighter than Fridays so we will know more by Wednesday, when the Fed completes its 2 days of meetings. Maybe many believe the bad news is already baked into this market, but I doubt it is. I am willing to be a believer with real data. I did not sell TNA nor SSO as I was looking to add to my positions on any drop. But it didn't happen today. I truly think we will all make at least 20-25% on this round trip for these ETF trades and I predict, again, within a 6 week period. That does not preclude a trip lower. If you are smart, buy on dips down and accumulate, because I think this next move up will be more like a sling shot, quick and far. Predicting the market direction means being in tune with the news and predicting outcomes there as well.

Should you start buying stock now?

That seems to be on everyone's mind. Durable Goods orders were bad this morning but this indicator tells you what happened last month as does the unemployment numbers. But to determine if this is the time to get back into the market one has to ask 2 questions. First, can you afford to buy stock given your individual financial condition? I can't answer that for anyone but myself. The second question is this. What has the U.S. Government been doing with their money? Well from what I see they are throwing as much money as they can print into solving this problem. And they are "investing" significant amounts of money into the financial sector and most likely will bail out the auto industry as well. So if the government thinks banks and auto companies are a good investment at this time, why don't you?

I think it is a very good time to be buying back into the market selectively. I have been suggesting to my readers to buy Ultra ETF funds, as a way of getting in. I was asked by a reader if I sold my SSO yesterday and the answer is No. Even though pre-market looks like a down day, I am semi confident we will finish the day positively. I will either sell it near the close, hold it till Friday or Monday and see what transpires. I could take the profit and most others should have, but I tend to be patient and wait till I know more clearly the market's direction. Besides SSO is down from the closing price yesterday, BUT it is up from pre-market price, even though the market is down at the open.

I ventured into Ford Motor company at $1.49 on Friday and Monday and may buy more going forward. I like the way the chart looks these past 4 days. It hit $1.80 in pre market so we will see where it ends today. Good luck and Happy Thanksgiving.