Author: Gary Harloff
Covestor model: Opportunistic ETF
Right now, you can see oversold conditions in style-box funds, as well as sector and world indices. Our analysis continues to be conservative as short funds, bonds, and the U.S. dollar have positive absolute price momentum. And long funds, precious metals, and emerging markets have negative price momentum. Our analysis indicates that prices are stabilizing. Thus, we look for a rebound soon.
If you are long at this point, it is not a good time to sell. If you are in cash equivalents, watch for a buying opportunity. The upward price reversal earlier in May was a false reversal. We continue to have sells on the S&P 500 (SPX), the Nasdaq 100 (NDX), and gold. We continue to have buys on bonds.
In the news is the Facebook (FB) IPO. Yet another example of Wall Street’s impropriety is large losses in Facebook stock by the broker-dealers. Instead of acting as a middleman between buyer and seller, Wall Street broker dealers bought shares with house (your) money and attempted to profit by selling it to individual investors at a profit. When the IPO went less well than they expected, they took losses.
How many broker-dealer “friends” do you have? But, Wall Street broker dealers and banks would never rig it against you! How can they with (all) the regulators watching? How can large banks and brokers pay their CEO’s $50 million per year anyway? Why is the Volcker rule delayed when we need one? Big Wall Street money must be speaking to hungry members of Congress.
Because the markets can turn quickly, be ready. May the market be with you (May 25, 2012)!
