I wanted to give you some opinions from some investment advisors I really respect. This is not to say that I always agree with them, but it is a good idea to get your ideas from several sources. By doing this, you can comfortably arrive on an intelligent investment strategy for your accounts. Here are some of those opinions:
LOUIS NAVELLIER:(www.bluechipgrowth.com, www.navellieremerging.com, www.navellierglobal.com, www.navellierquantum.com)
The stock market is essentially on hold until we hear more from the Fed. More specifically, the market wants to know when the Fed will stop raising rates. In a typical environment, the Fed would never want to invert the yield curve, but I think we can all agree that today's economy is far from typical. Furthermore, Greenspan said at the Joint Economic Committee meeting in early December that he doesn't think the yield curve is a "foolproof indicator of economic weakness". In fact, he said it can be "quite misleading".
We know that the Fed has been targeting the housing bubble and the 'carry' trade (when institutions and hedge funds borrow at the short end and lend at the long end). The carry trade is now essentially dead, so the Fed has succeeded with that mission. There are also signs that the Fed has successfully let some air out of the housing bubble. New and existing home sales are dropping, inventories are rising, mortgage applications are down, and prices are either falling, or moderating.
The Fed's latest concern has been 'resource utilization,' which is the same thing as the unemployment rate. If the unemployment rate drops below 5% on January 6, we will likely see more selling pressure in equities. If the rate holds 5%, we could see a rally.
On January 3, the Fed will release its minutes from the December FOMC meeting. The market will be looking for any clues that indicate the Fed is almost done raising rates. If the clues are there, the market could rally a bit before the employment report.
RICHARD BAND: (www.rband.com)
The game's over except for the cheering! Stock prices fell sharply in this holiday-shortened week, with the Dow Industrials closing down for the year. It was an inauspicious end to what is normally one of the strongest months in the market calendar.
At this point, stocks are technically oversold in a short-term sense, so we could get a bit of a bounce in the first few sessions of the New Year. But don't expect an upside explosion. We think the bull market that began in October 2002 is essentially over. By mid- to late-January, a significant "correction" should be under way.
How should you play it? First, make sure you've got adequate cash reserves. This afternoon, the three-month Treasury bill yield ticked up to 3.98%, its highest level in almost five years. We should see 4% soon, and then 4.25%.
PHILLIP ERLANGER (www.erlangersqueezeplay.com)
We still are holding out for a rally in January, but let's face it December was a bust. We continue to prefer larger cap blue chip issues going forward. We will be trimming long positions as we get closer to February.
For those seeking income from their investments, call writing has been a lucrative alternative to unhedged long positions this year. We will look to write calls again in late January.
We had a few gold positions in our screens over the past few months. Gold is for speculators only at this point.
