With stocks continuing to deliver gains week after week, the question is: Which ones should be the strongest over the short term? According to the charts, tech stocks might have an edge. Economic News Keeps Fed on Hold SPDR S&P 500 (NYSE: SPY) gained 0.61% last week, closing higher for the fifth week in a row. The gain was due to a 1.35% rally on Friday that reversed losses for the week.#-ad_banner-# SPY has now closed higher in 16 of the past 22 days (73%) since bottoming in early October. This is an unusually strong market. Over the past… Read More

With stocks continuing to deliver gains week after week, the question is: Which ones should be the strongest over the short term? According to the charts, tech stocks might have an edge. Economic News Keeps Fed on Hold SPDR S&P 500 (NYSE: SPY) gained 0.61% last week, closing higher for the fifth week in a row. The gain was due to a 1.35% rally on Friday that reversed losses for the week.#-ad_banner-# SPY has now closed higher in 16 of the past 22 days (73%) since bottoming in early October. This is an unusually strong market. Over the past 1,000 trading days, there has been an average of 12 up closes over 22 days (54.5%). Strength in the stock market is often followed by more strength, and I expect to see more gains in the stock market in the next few weeks. Friday’s gains could show that traders are getting comfortable with economic growth. GDP could grow as it did in the third quarter while unemployment remains high, a combination that should keep Fed policy on hold. This is bullish for the stock market. Friday’s reversal came after GDP beat expectations and stock prices fell on Thursday. On Friday,… Read More

Stocks moved up the fourth week in a row and have delivered a large gain in the first 10 months of the year. For now, there is no reason to expect a reversal in the trend. Stocks Continue Setting New Highs SPDR S&P 500 (NYSE: SPY) added another 0.15% last week and is now up 25.55% for the year, including dividends.#-ad_banner-# To put this performance into perspective, we can review data for the S&P 500 index going back to 1928. This year’s performance would be the 22nd best year out of 86. After such a strong performance,… Read More

Stocks moved up the fourth week in a row and have delivered a large gain in the first 10 months of the year. For now, there is no reason to expect a reversal in the trend. Stocks Continue Setting New Highs SPDR S&P 500 (NYSE: SPY) added another 0.15% last week and is now up 25.55% for the year, including dividends.#-ad_banner-# To put this performance into perspective, we can review data for the S&P 500 index going back to 1928. This year’s performance would be the 22nd best year out of 86. After such a strong performance, many investors expect a decline, and the question becomes, “How bad will the decline be?” In the past, large gains have been followed by losing years 43% of the time. Overall, 28% of the 86 years have closed down, so there is a slight bearish bias for 2014. In each of the years that showed a gain larger than this year’s, stocks cooled off in the next year and showed a loss or smaller gain. This information should be used in the next few weeks as we prepare expectations for 2014. Earnings are likely to determine whether 2014 is an… Read More

Stocks closed up for the third week in a row. This could be the signal that a pullback is finally near. Look For More Gains Into Year End SPDR S&P 500 (NYSE: SPY) gained 0.89% last week and reached another new all-time high. This was the third week in a row that SPY closed higher. Market prices do not move randomly, and consecutive runs (periods of time when the market closes up or down for a number of weeks in a row) mean something.#-ad_banner-#​ In general, runs show the direction of the trend. If prices were random,… Read More

Stocks closed up for the third week in a row. This could be the signal that a pullback is finally near. Look For More Gains Into Year End SPDR S&P 500 (NYSE: SPY) gained 0.89% last week and reached another new all-time high. This was the third week in a row that SPY closed higher. Market prices do not move randomly, and consecutive runs (periods of time when the market closes up or down for a number of weeks in a row) mean something.#-ad_banner-#​ In general, runs show the direction of the trend. If prices were random, there should be a 50/50 chance that they will be up or down in any week. Testing shows that SPY has actually closed up in 56% of the weeks since 2001. Over the long term, stock markets have an upward bias, and this results in slightly more up weeks than expected from a random process. In the short term, markets tend to revert to mean. That means we would expect a pullback after a gain. If you had bought SPY after an up week and sold one week later, you would have enjoyed winning trades 50.2% of the time, but… Read More

Don’t get me wrong, I closely follow what Warren Buffett says and does with his money. And yes, he’s one of the most successful investors in history — his returns over more than 60 years have made him the fourth-wealthiest person on the planet. He is rarely wrong, but Buffett is not perfect, and a recent comment he made is, in fact, incorrect. Let me explain… The Wall Street Journal found that Buffett made $10 billion on the investments he made at the height of the financial crisis. With characteristic humility, Buffett said, “In terms of simple profitability, an average… Read More

Don’t get me wrong, I closely follow what Warren Buffett says and does with his money. And yes, he’s one of the most successful investors in history — his returns over more than 60 years have made him the fourth-wealthiest person on the planet. He is rarely wrong, but Buffett is not perfect, and a recent comment he made is, in fact, incorrect. Let me explain… The Wall Street Journal found that Buffett made $10 billion on the investments he made at the height of the financial crisis. With characteristic humility, Buffett said, “In terms of simple profitability, an average investor could have done just as well investing in the stock market if they bought during the panic period.” Actually, an individual investor could have done significantly better than Buffett. #-ad_banner-#To earn $10 billion, Buffett invested $26 billion. His return on investment was about 38%, or 6.7% a year over the past five years. The Journal article says Buffett made his first crisis investment in April 2008 and added to his investments throughout the crisis. He made a number of deals late in 2008 and one as late as April 2009, after the stock market had bottomed. Assuming an individual… Read More

Don’t get me wrong, I closely follow what Warren Buffett says and does with his money. And yes, he’s one of the most successful investors in history — his returns over more than 60 years have made him the fourth-wealthiest person on the planet. He is rarely wrong, but Buffett is not perfect, and a recent comment he made is, in fact, incorrect. Let me explain… The Wall Street Journal found that Buffett made $10 billion on the investments he made at the height of the financial crisis. With characteristic humility, Buffett said, “In terms of simple profitability, an average… Read More

Don’t get me wrong, I closely follow what Warren Buffett says and does with his money. And yes, he’s one of the most successful investors in history — his returns over more than 60 years have made him the fourth-wealthiest person on the planet. He is rarely wrong, but Buffett is not perfect, and a recent comment he made is, in fact, incorrect. Let me explain… The Wall Street Journal found that Buffett made $10 billion on the investments he made at the height of the financial crisis. With characteristic humility, Buffett said, “In terms of simple profitability, an average investor could have done just as well investing in the stock market if they bought during the panic period.” Actually, an individual investor could have done significantly better than Buffett. To earn $10 billion, Buffett invested $26 billion. His return on investment was about 38%, or 6.7% a year over the past five years. The Journal article says Buffett made his first crisis investment in April 2008 and added to his investments throughout the crisis. He made a number of deals late in 2008 and one as late as April 2009, after the stock market had bottomed. Assuming an individual… Read More

Weekend headlines focused on new highs in the major market indexes. New highs in the fourth quarter are bullish, and any pullback should be treated as a buying opportunity. Tech Stocks At 13-Year Highs SPDR S&P 500 (NYSE: SPY) gained 2.43% last week and reached a new all-time high. PowerShares QQQ (Nasdaq: QQQ) gained 3.69% and closed at its highest price since November 2000. The monthly chart is shown below. Traders often focus on daily or weekly charts. Monthly charts also offer valuable insights, and the chart of QQQ shows an uptrend and… Read More

Weekend headlines focused on new highs in the major market indexes. New highs in the fourth quarter are bullish, and any pullback should be treated as a buying opportunity. Tech Stocks At 13-Year Highs SPDR S&P 500 (NYSE: SPY) gained 2.43% last week and reached a new all-time high. PowerShares QQQ (Nasdaq: QQQ) gained 3.69% and closed at its highest price since November 2000. The monthly chart is shown below. Traders often focus on daily or weekly charts. Monthly charts also offer valuable insights, and the chart of QQQ shows an uptrend and an upside breakout. I’ve added a few notations to the chart that support the argument for higher prices.#-ad_banner-# Going back to the 2000 high, I have added Fibonacci retracement levels. Common Fibonacci numbers are 38.2% and 61.8%. Once prices retrace 61.8% of the decline, a bullish trend is confirmed. Friday’s close of $82.15 is just above that level. In 2008, the bear market formed a pattern that could be called a rounding bottom. The name of the pattern is less significant than what a price pattern tells us. In general, technical analysts look at patterns because they expect… Read More

Stocks ended the week unchanged, but they should break out soon as earnings season begins.#-ad_banner-# Traders Seem Unconcerned By Washington SPDR S&P 500 (NYSE: SPY) closed down $0.02 on the week, virtually unchanged from a week ago. Despite the small change in price, analysts were very active, explaining that… Read More

Stocks pulled back last week and prices could fall a little more before this pullback ends. But there are two very good indicators pointing to higher stock prices by the end of the year. Fourth Quarter Could Determine Wall Street Bonuses SPDR S&P 500 (NYSE: SPY) dropped 1.06% last… Read More

Value stocks are usually companies that have a long record of success.  Definitions vary, but value stocks typically trade at average or below-average price-to-earnings (P/E) ratios and often pay dividends. Few companies start off as value stocks.  In a typical lifecycle, a stock might go from a hot IPO to… Read More

The Internet would not have grown as quickly as it did without Bill Gates. The Microsoft founder standardized software for the personal computers that are now linked together on the Internet. From our current perspective, it is obvious that software needs to be compatible with other software. But, in the… Read More