Today's winner: Cash
I apologize for a long break between my Blogs. The Stock market have been behaving pretty badly for past couple of months. Especially the U.S Government debt ceiling and Inflation in Emerging markets has finally spill over to the stocks. While the Governments are struggling to keep up with rising debt and inflation, the Companies are sitting on a historic amount earnings and cash. Companies are not able to decide on a stable market to Invest and grow their investments. But the inflation is creeping up across the world and companies cannot sit on un-invested cash for too long. There is only so much of Gold and Silver to hedge on the inflation. Those two are in historic highs . Let us look at the S&P 500 behavior for the past couple of months. As i have noted in my April Blogs when the stock market headed up on very low volume with least amount of Institutional Investors participating in the rally.
You can see from the above chart that S&P was down 9 out of 10 sessions on high volume. But the small positive not is that the Volume was weaker than the May crash to 1249. We are 30 points away from the Lows established in May. The Overall trend is very negative. We are yet to test the 52 week lows , Most of the downtrend is caused by recent spike in Oil Prices and Spiraling Debt crisis in the Western block.
The Recent oil reserve Data and Saudi efforts to increase output will recent in Supply exceeding demand in the Oil markets. Once the Summer driving season is over, we would see a 15% drop in Oil prices and create a temporary Commodity crash, which bodes well for the financial Markets.
Based on my recent analysis, S&P 500 has short term support around 1250 (may 2011 low) and if we continue sliding , we are looking a 52 week low of 1160. I would advice to stay in commodities (Gold , Silver and Oil ) until the low is established and switch back to Equities around the time we start seeing signs of Summer Rally.
The S&P 500 will see a 1400 by the end of this year if the Middle East and European Debt crisis Subsides.
I am Staying on Corporate Bonds, Oil stocks and Municipal Bonds until things are clear ..
Good Luck with your Investments...and Please check out my Novel "Life to Life : Journey to the Other side" in Amazon
I apologize for a long break between my Blogs. The Stock market have been behaving pretty badly for past couple of months. Especially the U.S Government debt ceiling and Inflation in Emerging markets has finally spill over to the stocks. While the Governments are struggling to keep up with rising debt and inflation, the Companies are sitting on a historic amount earnings and cash. Companies are not able to decide on a stable market to Invest and grow their investments. But the inflation is creeping up across the world and companies cannot sit on un-invested cash for too long. There is only so much of Gold and Silver to hedge on the inflation. Those two are in historic highs . Let us look at the S&P 500 behavior for the past couple of months. As i have noted in my April Blogs when the stock market headed up on very low volume with least amount of Institutional Investors participating in the rally.
The Recent oil reserve Data and Saudi efforts to increase output will recent in Supply exceeding demand in the Oil markets. Once the Summer driving season is over, we would see a 15% drop in Oil prices and create a temporary Commodity crash, which bodes well for the financial Markets.
Based on my recent analysis, S&P 500 has short term support around 1250 (may 2011 low) and if we continue sliding , we are looking a 52 week low of 1160. I would advice to stay in commodities (Gold , Silver and Oil ) until the low is established and switch back to Equities around the time we start seeing signs of Summer Rally.
The S&P 500 will see a 1400 by the end of this year if the Middle East and European Debt crisis Subsides.
I am Staying on Corporate Bonds, Oil stocks and Municipal Bonds until things are clear ..
Good Luck with your Investments...and Please check out my Novel "Life to Life : Journey to the Other side" in Amazon
