Grabbing The Bull By The Horns
Yesterday was one hell of a rally. The S&P 500 held its line of support at 1419 and then ripped to within 0.8% of its September 2012 intraday high (Bernanke Top, anyone?) All it took was a little deal on the fiscal cliff. No biggie. Oh yeah - The Russell 2000 closed up +2.9%, making an ALL-TIME high at 873. Keith’s multi-duration S&P sector model is blowing gaskets like a Looney Tunes clock spinning a hundred times a minute; all nine sectors are bullish on all three durations (TRADE, TREND, TAIL) for the first time since December of 2011. This is huge. Anyone who shorted yesterday’s rally got their face ripped off.
So what happens next? There is a very good opportunity for the big guys - the asset managers - to move capital out of bonds and into stocks. Earning 50 basis points a year isn’t generating alpha, but participating in a full on bull rally will, provided you manage your risk. With #GrowthStabilizing, stocks on the rise and a housing market in recovery, we’re just a catalyst away from taking this market even higher.