Wall Street Week Ahead: Strong start to 2013 could be tested – Storm Victim

The stock market is no stranger to strong performances in January, only to see the lofty gains early in the year transition into months of grinding action that goes nowhere.

That's what happened in 2011 and 2012, and some analysts think 2013 could follow the same routine. Markets are up this year in the face of Washington's debates over fiscal policy, but a looming deadline on spending reductions could test the gains.

Major indexes recently crossed psychologically important milestones - 1,500 for the S&P 500 and 14,000 for the Dow industrials. The S&P is at its highest level in five years, while the Nasdaq finished on Friday at its highest close since November 2000, the tail end of the Internet bubble.

The current levels are more significant than Wall Street's usual fixation on round numbers. This is only the second time the Dow has reached 14,000, and the third time the S&P has hit 1,500. (commentary &photo courtesy of Reuters)

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I’ve been caught in the great Eastern snow storm and I am unable to publish my weekly RSI report. I’ll be back next weekend with new analysis.

Take care to all.

Wall Street surges to five-year highs; Dow ends above 14,000 –RSI likes Thailand

Stocks rose to five-year highs on Friday, with the Dow closing above 14,000 for the first time since October 2007, after jobs and manufacturing data showed the economy's recovery remains on track.
The S&P touched its highest since December 2007 after a 5 percent gain in January, which was its best start to a year since 1997. The index is now just about 60 points away from its all-time intraday high of 1,576.09.
Employment grew modestly in January, with 157,000 jobs added. That was slightly below expectations, but Labor Department revisions showed 127,000 more jobs were created in November and December than previously reported.
Investors poured $12.7 billion into U.S.-based stock mutual funds and exchange-traded funds in the latest week, concluding the strongest four-week flows into stock funds since 1996, data showed on Thursday.
The Dow Jones industrial average was up 149.21 points, or 1.08 percent, at 14,009.79. The Standard & Poor's 500 Index was up 15.06 points, or 1.01 percent, at 1,513.17. The Nasdaq Composite Index was up 36.97 points, or 1.18 percent, at 3,179.10. (commentary & photo courtesy of Reuters)
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This week RSI has a new pick:

• iShares MSCI Thailand Invest Mkt Index (THD)

THD has been exhibiting excellent price performance since its low in October 2011. It has demonstrated great money flow from the investing community. My reservation is that its relentless ascent hasn’t had a pause in the past ten weeks. I would wait for a pullback before purchasing this ETF.

Have a great week and I’ll catch you next weekend.

Wall Street Week Ahead: Bears sleep as stocks near record highs – RSI picks three

U.S. stocks have been on a tear in January, moving major indexes within striking distance of all-time highs. The bearish case is a difficult one to make right now.

Earnings have exceeded expectations, the housing and labor markets have strengthened, lawmakers in Washington no longer seem to be the roadblock that they were for most of 2012, and money has returned to stock funds again.

The Standard & Poor's 500 Index is up 5.4 percent this year and above 1,500 - climbing to the spot where Wall Street strategists expected it to be by mid-year. The Dow Jones industrial average is just 2 percent away from all-time highs reached in October 2007. The Dow ended on Friday at 13,895.98, its highest close since October 31, 2007.

The S&P 500 has risen for four straight weeks and eight consecutive sessions, the longest streak of days since 2004. On Friday, the benchmark S&P 500 ended at 1,502.96 - its first close above 1,500 in more than five years. (photo & commentary courtesy of Reuters)

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I apologize for my missing last weekend’s blog post, but it couldn’t be avoided. This doesn’t happen very often.

In keeping with the market’s euphoria, this week RSI is straying away from its usual foreign and emerging fund picks. Instead RSI is recommending looking at the following three USA invested funds:

• First Trust Dow Jones Internet Index (FDN)
• iShares Dow Jones Transportation Average (IYT)
• iShares Dow Jones US Home Construction (ITB)

All three funds are connected with Dow Jones Indices and what could be more American? Examine the charts and you will see excellent strength that should point to higher future prices.

I will consider these picks for inclusion into RSI’s portfolio. Currently the portfolio needs more emphasis on American centric holdings and these three fit that bill. After all, the US markets may be “the prettiest horse in the glue factory”. Catch you next weekend.

Wall Street Week Ahead: Attention turns to financial earnings – RSI adds more picks

After over a month of watching Capitol Hill and Pennsylvania Avenue, Wall Street can get back to what it knows best: Wall Street.

The first full week of earnings season is dominated by the financial sector - big investment banks and commercial banks - just as retail investors, free from the "fiscal cliff" worries, have started to get back into the markets.

Equities have risen in the new year, rallying after the initial resolution of the fiscal cliff in Washington on January 2. The S&P 500 on Friday closed its second straight week of gains, leaving it just fractionally off a five-year closing high hit on Thursday.

Investors were greeted with a slightly better-than-anticipated first week of earnings, but expectations were low and just a few companies reported results.

Worries about the protracted fiscal cliff negotiations drove the markets in the weeks before the ultimate January 2 resolution, but fear of the debt ceiling fight has yet to command investors' attention to the same extent.

For the week, the S&P and Dow both gained 0.4 percent and the Nasdaq rose 0.8 percent. (commentary & photo courtesy of Reuters)

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This past week I added positions in the following to the RSI portfolio:

• PowerShares WilderHill Clean Energy (PBW)
• iShares MSCI BRIC Index (BKF)
• iShares MSCI Turkey Invest Mkt Index (TUR)

Currently the RSI has a 50% cash reserve allocation. I anticipate more of the cash reserves will be committed to the market. The following funds will be considered.

RSI selected three outstanding candidates this week:

• iShares Dow Jones US Home Construction (ITB)
• Credit Suisse Cushing 30 MLP Index ETN (MLPN)
• iShares MSCI All Peru Capped Index (EPU)

Taking ITB first, it has been in a strong uptrend since October 2011. Maybe it is long in the tooth, but the return of housing market makes it a good candidate once it has pulled back. Money flow has flattened out. At this point, don’t chase it. A bit of patience is warranted here.

MLPN is a fund of Master Limited Partnerships (MLP). It pays out a 5.55% yield. It is attracting investor’s dollars in anticipation of the growth of the US energy market and because of its generous yield. I like this fund at this stage of the market.

Last is the Peru fund EPU. It has performed nicely with investors expecting great things from this resource rich country. It pays a 3.56% yield. I like this ETF, but I understand if one wishes to waits until there is a pullback before buying.

That’s it for this weekend.

S&P 500 finishes at 5-year high on economic data – RSI has three new picks

The benchmark Standard & Poor's 500 index ended at a five-year high on Friday, lifted by reports showing employers kept up a steady pace of hiring workers and the vast services sector expanded at a brisk rate.
The gains on the S&P 500 pushed the index to its highest close since December 2007 and its biggest weekly gain since December 2011.
Most of the gains came early in the holiday-shortened week, including the largest one-day rise for the index in more than a year on Wednesday after politicians struck a deal to avert the "fiscal cliff."
The Dow Jones industrial average gained 43.85 points, or 0.33 percent, to 13,435.21. The Standard & Poor's 500 Index rose 7.10 points, or 0.49 percent, to 1,466.47. The Nasdaq Composite Index edged up 1.09 points, or 0.04 percent, to 3,101.66.
A drop in Apple Inc shares of 2.6 percent to $528.36 kept pressure on the Nasdaq.
For the week, the S&P gained 4.6 percent, the Dow rose 3.8 percent and the Nasdaq jumped 4.8 percent to post their largest weekly percentage gains in more than a year. (commentary & photo courtesy of Reuters)
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RSI has came up with several interesting picks this week. First is the clean energy fund PBW. Look at the chart. It shows a possible end to its two year drop. Maybe it is recovering and reversing its long slide.

Next is the Vietnam fund that also is showing a strong breakout. Money is flowing into this fund too.

Lastly there is the BRIC (Brazil, Russia, India, and China) fund, BKF, which invests in these emerging markets. It too is showing its strength and is an excellent diversified fund.

With some trepidation, I will be possibly adding some ideas to the RSI portfolio. Check back next weekend.

Near the Cliff: At the End of the Year

As we conclude 2012, the market continues to be influenced by the looming US Fiscal Cliff. With that in mind, I have chosen to avoid sharing any RSI picks until next weekend. I hope the followers of RSI will understand my reluctance. However, I will share my observations that RSI has been very favorable to many of the emerging market and foreign ETFs. The remaining holdings in the RSI portfolio have managed small, positive gains while the market has been dropping every day.

I wish you all a Happy New Year. Catch me next weekend.

Wall Street ends lower after "fiscal cliff" setback – Three funds hit stops

U.S. stocks finished lower on Friday after a Republican plan to avoid the "fiscal cliff" failed to gain sufficient support on Thursday night, draining hopes that a deal would be reached before 2013.

Still, stocks managed to rebound from the day's lows near the end of the session, and for the week, the three major U.S. stock indexes still ended higher, with the S&P 500 gaining 1.2 percent.

Trading was volatile because of waning confidence in the prospect of a deal out of Washington, and in part, as the result of the quarterly expiration of options and futures contracts. The CBOE Volatility Index or VIX, the market's favorite barometer of investor anxiety, finished below its session high.

The Dow Jones industrial average dropped 120.88 points, or 0.91 percent, to 13,190.84 at the close. The Standard & Poor's 500 Index fell 13.54 points, or 0.94 percent, to 1,430.15. The Nasdaq Composite Index lost 29.38 points, or 0.96 percent, to 3,021.01. (commentary & photo courtesy of Reuters)

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Three RSI positions hit their stops this week. They were GAZ, SLV, and BOND. This leaves only three holdings remaining KOL, MCHI and PGX. They are holding their own except for MCHI which has an outstanding upward trajectory.

With the market and political uncertainty, it is of little wonder that RSI has no new recommendations.

So we have two more weeks of thin markets with more worry thrown in to boot. I’ll catch you next weekend.