|Dow||+46.97 to 18,019.35|
|S&P 500||+8.51 to 2,096.99|
|Nasdaq||+36.22 to 4,893.84|
|10-YR Yield||+0.04 to 2.02%|
|Gold||+$7.90 to $1,228.60|
|Crude Oil||+$1.55 to $52.76|
My “Big Reversal” Thesis is Playing Out in Other Markets! How to Profit …
Don’t look now, but stocks are hitting fresh highs again!
The Nasdaq Composite climbed to a new multi-year peak today. That move puts the Comp less than 300 points from its dotcom bubble high in 2000 …
The Standard & Poor’s 500 Index tagged a fresh all-time high around 2,094 …
The broader Russell 2000 Index came within an inch of a fresh high, and the Dow Industrials got very close, too.
I credit optimism about a European deal on Greece, encouraging economic data at home and abroad, and decent earnings out of some key tech bellwethers. But it’s much more than that. The “Big Reversal” trades I’ve been forecasting for some time are playing out — and that’s helping give the market a fresh leg up!
|Brent crude oil futures spiked above $60 a barrel today for the first time in 2015.|
Take energy. Brent crude oil futures spiked above $60 a barrel today for the first time in 2015. U.S. crude prices are also on the rise.
Can it continue? Well, I said it before and I’ll say it again — the bargains and values in the energy patch are the most compelling I’ve seen in decades. And now, Wall Street appears to be hopping on the bandwagon. That “Big Reversal” in energy helped drive the benchmark Energy Select Sector SPDR Fund (XLE) to its highest level in more than two months today.
Then there’s the currency market. I’ve been talking about an impending “Big Reversal” there in the dollar. Why? Negative sentiment over Europe’s economy and the euro currency is running hot and heavy. But after warning (in advance!) about those problems for almost a year, I started “switching sides” in the past few weeks. I told you the dollar was now looking more and more vulnerable than the euro, and I recommended my Safe Money Report subscribers grab big profits on an anti-euro position.
Sure enough, we just learned that German GDP rose 0.7 percent in the fourth quarter of 2014. That was a big improvement from the 0.1 percent increase a quarter earlier, and far better than the 0.3 percent prediction of economists. Europe-wide GDP also beat forecasts.
This is the kind of “less bad” news that could help shift momentum away from the dollar and toward the euro. Other currencies like the New Zealand, Canadian, and Australian dollars all appear to be bottoming as well. Heck, even the lowly Japanese yen bounced in the past 48 hours as media reports suggested the Bank of Japan is questioning the benefits of more QE.
The loss of dollar steam is already helping materials stocks, along with energy shares. If it really gets clocked, it’ll give the consumer staples names a break — one they could definitely use. Even Big Pharma could benefit since the industry sells a ton of products overseas, and the strong dollar has crimped revenue growth. Those moves could give this stock market breakout even more oomph.
|“I’ve gotten much more bearish on the dollar, and more bullish on emerging market currencies, bonds, and equities.”|
Bottom line: I’ve been bullish select, highly rated stocks in sectors with strong momentum. I’ve gotten much more bullish on beaten down sectors like energy in the past several weeks. I’ve gotten much more bearish on the dollar, and more bullish on emerging market currencies, bonds, and equities.
All of those theses are working right now, so I would focus on investments designed to capitalize on them. Specific ideas and “buy” and “sell” recommendations can be found in my Safe Money Report, so give it a look if you haven’t already.
What about you? Are you making money in today’s breakout market? What kinds of stocks, currencies, and bonds are you investing in — and which are you avoiding like the plague? Spend some time at the Money and Markets website this weekend sharing your ideas, and I’ll address as many of your comments as I can!
|Our Readers Speak|
Investors are talking tech on TV, in light of the break out in the Nasdaq Composite — and you were doing the same at the website.
Reader Phil discussed the challenges and opportunities facing Tesla Motors (TSLA, Weiss Ratings: D+) CEO Elon Musk, in light of his own personal auto situation. His view:
“My Lexus gets 350 miles on a tank of gas, and the Tesla Model S P85 (for 85 kwh battery) gets 285 miles on a charge. That’s pretty similar, considering that I can come home, plug in my Tesla, and it’s charged later that day or the next morning.
“So I don’t think distance is the main issue. The issues for me are charging while traveling (possibly problematic), and the lack of readily accessible places to go to see and try out the Teslas (i.e., no dealers). And price (but that will change).”
As for what’s next for other tech stocks, Reader Fred1 struck a bullish note for the near term … but a more cautious tone for down the road. His take:
“It looks like tech wants to rally off from a very rough triangle formation. I think we have a 5th wave that could bump the Nasdaq 100 20-percent or so in the next 1-2 months. But that is an ending statement/formation. After that, look out below! Cisco Systems (CSCO, Weiss Ratings: A-), Apple (AAPL, Weiss Ratings: A+) and others should really benefit.”
As for interest rates, Reader Randy asked:
“Whatever happened to that rate hike you were dead sure of by the Fed at their last meeting?”
Thanks for the question. Looks like the Fed wanted a bit more data on inflation and the job market before acting. But recent Fed comments and speeches, the very strong jobs data we got for January, and more tell me a hike is getting closer and closer.
So it’s not a matter of “if” they hike, it’s a matter of “how soon.” And if you’re not prepared for all the ramifications of that, I think you’re doing your portfolio a real disservice!
Hope you have a great weekend, and if you haven’t already joined these discussions, I urge you to hit up the website and do so.
|Other Developments of the Day|
Negotiations are continuing between Greece and creditor nations ahead of a major European Union gathering on Monday. Finance ministers and other officials are saying all the right things about a potential compromise, but the rubber has to meet the road soon for markets to keep running.
U.S. import prices plunged 2.8 percent in January, the biggest monthly drop since December 2008 in the midst of the Great Recession. Weak foreign economies and the surging U.S. dollar were key contributors.
I believe the Federal Reserve may start talking down the dollar to the best of its ability in response. That’s another reason I’m increasingly bearish on our currency!
ISIS breached the outer barrier of an Iraqi base where U.S. troops are training Iraqi forces. But trying to breach the highly guarded base with just eight fighters was reportedly a disaster — all of them were killed with no friendly casualties.
Another tragedy struck the media world yesterday, with well-known New York Times columnist David Carr collapsing at work. The former addict and author later died. He was 58.
Looking to weigh in on Europe? Oil prices? The risk of inflation? I sure hope so — and this link to the website will help you get the conversation going.
Until next time,
P.S. The market will be closed on Monday for the Presidents Day holiday. So I will not have an afternoon edition. But I’ll be back on Tuesday right after the markets close. Enjoy the extended weekend!