Home About Archives RSS Feed

@theMarket: Precious Metals Gain While Stocks Mark Time

Bill Schmick

As investors waited for stocks to make up their mind, gold and silver took off this week. Gold made new highs while silver's price level is higher than at any time since 1980. The question is will stocks follow that lead or fall back as they have the last two times the S&P 500 reached this level.

Up until this week, most people (including myself) were betting the market would roll over for a third time and head back to the lows or make new lows. However, thanks to recent economic data that has shed a more positive light on the health of the economy, bullish sentiment among investors has increased to slightly over 50 percent, the highest reading in two years, according to the American Association of Individual Investors. But before you start jumping up and down just three weeks ago those same fickle investors registered the second largest bearish stance in two years. It just indicates how confused we all are about the future direction of the stock market.

In addition, most of us have a trust issue with this market. According to a recent AP-CNBC poll, nearly 90 percent of investors with less than $50,000 and 75 percent of those with $250,000 to invest, believe the stock market is unfair to the little guy. One indication of that sentiment is the continued light volume. Normally after Labor Day volume increases, but the opposite has occurred. That's another sign that market participants are not willing to be burnt a third time. So far this attempt to break out of this four-month trading range has been skittish at best.

All week the market has inched up and down tentatively extending its reach upwards without actually touching the 1,130 level on the S&P. Even if it breaks that level, there is no guarantee that it won't swoon sometime in October. With this much negative sentiment, the contrarian in me is whispering "what if."

What if the markets confound us all and do break out? I must confess that based on the recent economic data and the market's ability to hold the lows over the past few months, I've decided to give stocks the benefit of the doubt here in the short term. However, I am in the "show me" camp. I won't trust this market until I see volume expand and volatility begin to dampen down.

Regardless of what the market does now, I still want to keep some powder dry (cash) at least into October. Further out, I expect a rebound in stock markets which could last for the next two or three quarters.

This is not rocket science. Historically (since 1900) markets do better after mid-term elections, with the uptrend continuing through the first and second quarter of the following year. Couple that history with a growing probability that the GOP will regain sufficient seats in Washington and you have the ingredients for higher markets in the future.

As readers know, I have never believed in a double-dip recession and I have been expecting the economic numbers to improve as more stimulus money is spent and the economy strengthens. That appears to be happening, which will give some fundamental support to my forecast of the market's expected gains.

1 Comments
Tags: metals, recession, volume      
News Headlines
McCann Senior Named U.S. Presidential Scholar
Berkshire Chamber, Visitors Bureau Merge Into 1Berkshire
Clarksburg Passes Fiscal 2017 Budgets, New Zoning Bylaws
Mount Greylock School Committee Member Charges Open Meeting Violation
Berkshire Innovation Center Hitting Number of Funding Hurdles
St. Stan's Students Walk to Raise Money for Water Project
Lanesborough Looks to Join Berkshire Mosquito Control Project
Talk to Your Adult Children About Smart Financial Moves
Pittsfield Approves Extending Tax Breaks For Beacon Cinema
Mister Tire Closing After 38 Years in North Adams

Bill Schmick is registered as an investment advisor representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires. Bill’s forecasts and opinions are purely his own and do not necessarily represent the views of BMM. None of his commentary is or should be considered investment advice. Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com Visit www.afewdollarsmore.com for more of Bill’s insights.

 

 

 



Categories:
@theMarket (200)
Independent Investor (277)
Archives:
May 2016 (3)
May 2015 (1)
April 2016 (7)
March 2016 (8)
February 2016 (5)
January 2016 (5)
December 2015 (6)
November 2015 (6)
October 2015 (9)
September 2015 (7)
August 2015 (7)
July 2015 (6)
June 2015 (8)
Tags:
Debt Retirement Interest Rates Europe Economy Markets Rally Bailout Energy Housing Fed Currency Stock Market Recession Deficit Fiscal Cliff Selloff Japan Greece Oil Banks Europe Stocks Pullback Commodities Taxes Debt Ceiling Crisis Metals Euro Federal Reserve Stimulus Jobs Election Congress
Popular Entries:
The Independent Investor: Don't Fight the Fed
The Independent Investor: Understanding the Foreclosure Scandal
@theMarket: QE II Supports the Markets
The Independent Investor: Does Cash Mean Currencies?
@theMarket: Markets Are Going Higher
The Independent Investor: General Motors — Back to the Future
The Independent Investor: Will the Municipal Bond Massacre Continue?
@theMarket: Economy Sputters, Stocks Stutter
The Independent Investor: Why Are Interest Rates Rising?
The Independent Investor: How Will Wall Street II Play on Main Street?
Recent Entries:
The Independent Investor: Let's Have a Jewelry Party
@theMarket: Traders Build a Wall of Worry
The Independent Investor: Giving Up Control in the Event You Need To
@theMarket: It May Be That Time Again
The Independent Investor: What Do Prince, You and a Will Have in Common?
@theMarket: Markets Hold on to Weekly Gains
The Independent Investor: Leaving your Legacy
The Independent Investor: Have You Had 'The Talk' Yet?
The Independent Investor: Long-Term Care Insurance Can Be Crucial to Your Future
@theMarket: Economy Stronger, Stocks Weaker