May 5, 2013
Weekly Market Outlook
By Keith Schneider
One of the great Wall Street adages is "Sell in May and Go Away". That caught a lot of professional's off guard this year. Many packed up their bags and left town, or shorted the market based on this seasonal trend. This seasonal is so strong that from 1950 till today, if one followed the strategy you would be actually slightly positive. Remarkably, this occurred during a period where the Dow has gone from 200 to 14,500. On Friday, the Fed reported that unemployment dropped to its lowest level since the great meltdown of 2008 and the markets rallied to new highs. Forget meltdown; think Melt up and another bubble floating in the ether. Depending on who you talk to, we are either on the verge of a financial meltdown or energy independence which will usher in a new age of prosperity. This disparity and wall of worry is exactly the fuel the market needs to enter the blow-off phase. Another trading truism is never fight a broken pattern, which Friday's breakout certainly is. The most interesting chart is the monthly chart on the Dow indicating just where a top might form. AAPL surprised this week with its re-birth as of one of the zombies from the Walking Dead by coming alive and delivering a whopping 15% rally off the lows. Even more noteworthy is this occurred with not a new product in sight and except for some slick financial engineering which delivered the message the company is serious about returns to shareholders, the slowdown in earnings growth persists. As a result the NASDQ 100 finally broke out of this year's sideways pattern pointing to more gains led by technology.
Check this week’s video to see where this rally is headed next...
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