Week 4 of 2012 trading brought the markets to new relative highs but ended the week with a thud as resistance held firm. Helicopter Ben Bernanke reaffirmed his zero interest rate policy this week and along with earnings, it was enough to push the market even further.
Economic data this week signaled things are okay but not great. Jobless claims moved higher and GDP missed expectations. The Euro zone is still a disaster but the headlines have stopped and has enabled the market to continue to grind higher.
Earnings headlines have been positive for the most part but what the talking heads on TV *forget* to report is that the majority of reporting companies reduced their earnings outlooks prior to reporting. Therefore, the beats that are being reported or actually merely surpassing a reduced earnings target.
Positive earnings headlines have not been enough to push the market through resistance and with the run the markets have had, the action feels a little toppy. Keep in mind this is a short squeeze and it could have further to go but things are starting to feel more and more shaky by the day.
The Nasdaq leads the indexes up +6% this year alone. Yes, you read the right, +6% this year alone. Even if things were great domestically and Europe was not a financial powder keg, market can't rise at a 6% per month rate. To provide some perspective, "good" years of market performance are considered to be +10%. So even if this year was going to be "good" for markets, January alone would constitute 60% of the performance for the year.
The S&P is up +4.6% YTD and remains short trem overbought along with all the indexes. I anticipate a visit to S&P 1280-ish in the next 1-2 weeks and have positioned the BookingAlpha portfolios accordingly.
Navigate wisely and stay profitable, my friends. Happy trading!
