Stock market volatility has been increasing in a big way this year.
The last time I remember seeing such big moves in stock prices was back in the late 1990s, when the dot.com technology bubble was booming and then later collapsed in early 2000.
Energy stocks
My strategy for now is to make quick moves in and out of the market with the hope of making small gains until a clear market trend emerges.
Energy stocks are in a downward spiral even though they have had a bounce in early February. I am carefully watching to see if a bottom on oil prices starts to take hold.
I’ve also noticed that some mineral and mining stocks have also had a small bounce up.
Watch list
I’m waiting to see if a positive trend occurs in minerals and mining stocks BHP Billiton (BHP) and Teck Resources (TCK).
The shares of companies such as Procter & Gamble (PG) and Microsoft (MSFT) have been hit by the stronger dollar. I am waiting to see if this situation gets better or worse.
Some stocks that I like for the longer term, and am considering establishing positions in, include: General Motors (GM), Discover Financial Services (DFS), Delta Airlines (DAL), Pandora (P), AK Steel Holdings (AKS), Yandex (YNDX), JD.com (JD) and SouFun Holdings (SFUN).
Valuations
The question is when I will be able to buy these stocks at attractive prices.
I still do not have a solid outlook for the months ahead as the current stock market is in a range that has been compressing for weeks.
I am waiting to see if the S&P 500 Index breaks out above the 2,100 level in a solid manner or if it breaks below 1,975 to around 1,950 and starts a serious downtrend.
So many stocks are moving in so many directions that I think a great big move in stocks is about to occur in my opinion.
Global impact
The swoon in energy prices has hit commodity-sensitive economies like Africa, Australia, Canada, Russia, Brazil and the Middle East.
Will these market conditions continue or will a new buyer on the scale of China emerge and lift the energy markets?
Will the US market rally continue? Or will this year see a correction or even a bear market?
Time will tell. In the meantime, I hope to ride along with whatever direction emerges.
Photo Credit: Jeff Kubina via Flickr Creative Commons
DISCLAIMER: The investments discussed are held in client accounts as of January 31, 2014. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable. Past performance is no guarantee of future results.
