One More Reason I'm Bullish
The market hardly budged yesterday. Volume picked up compared to Tuesday but was still below average for this time year. But volume has been low for basically the entire second half of this year so I'm not going to read too much into yesterday's light volume day.
Far more notable than the low volume was the impressive day big bank stocks had. I have mentioned over the past three months that a strong rally could not occur if big bank stocks did not participate.
Big bank stocks are not only participating in the latest bull rally, but the financial sector is leading the charge higher. The financial index is up 12% since the rally began and was up another 1.3% yesterday. As long as the big banks post big gains, the market is going higher and SPX is going to 1300, therefore I remain bullish.
My TradeMaster Daily Stock Alerts service continues to add long positions. Last week members added Netflix (Nasdaq: NFLX), which is up 9% since the entry. And yesterday we added another blockbuster tech stock that still has 20% upsides despite the 12% it made for us in one session.
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Forex traders, which I am too on occasion, have followed economic data in Japan closely over the past several months. The yen, Japan's currency, continues to move higher. And a strong currency can really hurt an export-driven economy like Japan's.
Over the past few years the Bank of Japan has tried to stem the tide of a strong yen. But those attempts have been half-assed. The lazy job is partially due to the fact that Japan has changed its financial leadership five times in the last decade. An aging population and cataclysmic tsunami certainly didn't help either.
No matter what is to blame, the yen continues to move higher. And production data has worsened. Yesterday Japan reported that new orders, which measures capital spending, fell 6.9% in October. And that is after a fall of 8.2% in September. The strong currency is mostly to blame and the strong yen could push Japan into recession. The currency will need intervention if it is to decline any time soon. And intervention could easily spike the yen 4% lower overnight.
What is your biggest investment concern right now? What about into next year? I would like to hear your thoughts, please drop me a line sometime today at marketforecast@wyattresearch.com.
