A Good Month

Posted: Oct 26, 2011 12:01 AM
We’re coming up on the end of what has been an exceptionally strong month. In the last few weeks, we’ve seen tremendous moves in equities—the Dow shot up more than 9%, the NASDAQ more than 11% and the S&P more than 10%. After a run like that, we want to see the market stop and take a deep breath. In fact, this pullback that’s taking place early in today’s session is one of the healthier things we could see.

I’m not a fortuneteller, so I’m not going to try to predict how long this pullback will last. But what I will tell you is how bull markets tend to trade: they open lower, then grind their way higher throughout the course of the day. If we see this market work its way back up this afternoon, it could signal that this market is really ready to break out.

In the next couple of days we’re going to see end-of-month activity start to play into things as well. Remember, we have that T+3 settlement process for stocks, and there are still a lot of portfolio managers out there who are underinvested. The fact that they don’t have the positions on that they need to have on between now and the end of the year could create a tremendous base for an even bigger move that could catch everyone off guard. I’m looking as high as the 1350 area for the S&P and maybe another 100 Dow points before we’re done.

Keep an eye on the 10-year, and look for it to work its way up to that 2.30% level on the yield as more of that scared money finds its way back to risk. Unless we see some kind of a black swan event or something new out of Europe, that’s going to continue to be the leak—money will work its way out of fixed income and into equities. Watch the natural ebbs and flows over the next couple of days for opportunities. And don’t forget we’ve got the first-look GDP on Thursday—that’s one of the bigger numbers we have on the calendar in the next couple of weeks.


They say there’s no such thing as a free lunch, but this time they’re wrong. Dan “The MoneyMan” Frishberg, Currensee, Bull & Bear Institute and I will all be down in Florida for the Biz 880 Miami Money Expo on November 3 at the Mayfair Hotel in Coconut Grove. The event is FREE and spots are filling up very fast—email me if you’d like more details or to make your reservation. Oh, and lunch that day will be on Schwab!


Speaking of Currensee, I’d like to thank Jeff Garcia from that wonderful company for coming on the show this morning to discuss the forex trade. Currensee and I will present a free webinar, “Five Best Kept Secrets of Investing in the Growing Foreign Currency Market,” this Thursday, October 27 at 4:30pm ET. Register today. This one’s free too, folks!


My other guest on the show this morning was Dr. Chris Kacher of virtueofselfishinvesting.com and co-author of the book “Trading Like an O’Neil Disciple: How We Made 18,000% in the Stock Market.” It’s always nice to talk to smart people like Dr. K—especially because he’s based over in England and has a unique perspective on the European situation. He also mentioned three very compelling stock picks that I actually wrote down myself—check out the podcast to hear them yourself.

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