"How are you?"
"Hanging in there."
Have you ever had that conversation before? Not sure what it means, bullish or bearish, but that is about how I interpret the stock market - hanging in there.
Three months ago, it wasn't hanging in there. We were sitting here stewing over the European situation, the upcoming poor second quarter earnings, ECRI loudly restating their opinion that the US was already in a recession, the dead US housing market, and the vulnerability of the bank stocks. The market was also trying to mimic the very tough corrections of 2010 and 2011. So now....what do we have three months later?
We have headlines showing the highest close of the S&P 500 since 2007, we have Europe coming together on this grand plan to make everything right, the housing prices have started moving back up, the economy is still scraping by, and lo and behold, the hot stocks of today are the bank stocks.
Do you ever wonder why we don't use current news and concerns to determine our asset allocation?
Today, our Asset Allocation Model is also "still hanging in there." The S&P 500 has rallied from 1275 to 1433, a gain of 12% from the despair of June 4th. Our Psychology Composite moved to P4 on August 14th, and looked to be edging toward that P5 rating that would make us raise a little short-term cash, but so far, the reading has stabilized at the same reading for the last few weeks.
So, our posture, as of the last two weeks, is to put our entusiasm for "new" buying of stocks on hold, and to hang in there, since the long-term still looks very promising.
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