Low of the Year
Research for Online Investors

01/20/12

The market is watching as Greece negotiates with creditors today.  G20 Deputies meet on Monday to work on agenda items for the meeting in Mexico this summer.  The World Economic Forum is being held next week in Davos, Switzerland.  The Federal Reserve Open Market Committee (FOMC) meets next Tuesday and Wednesday.

Too many politicians, so little time.  We feel wary of the market; the QQQ ETF is trading within a few cents of its 52-week high.  Does that make sense?  Home sales hit an eleven month high in December.  Inventory for sale was the lowest in seven years.

Just wait until the banks settle the legal problems with “robo-signed” foreclosure documents…that ought to release a glut of homes for sale.  The median sales price on homes sold in December was down 2.5%, making 2011’s price decline 3.9%.  As more foreclosed properties come on the market this year, prices may continue lower.

On a good note, home sales were up five percent in December, in both single and multi-family.  One-third of pending home sales contracts were cancelled in December.  The National Association of Realtors (NAR) blames ‘stringent’ bank lending practices.

Steven Blitz, senior economist at ITG Investment Research believes the housing market has turned the corner.  A talking head on CNBC this morning predicted the housing market recession was over.  I am not convinced.

We are finishing five weeks of bullish market action.  How long can it go?  I don’t know.  I would just remind you all the politicians are back at work, and there is no limit on the good they can do.

Do You Think We Have Seen The Lows of the Year?

If not, why not follow our lead?  We are selling into this market.  It could go higher but why not take some gains off the table?  Our Buy, Sell, Hold (covered call) subscribers will have half their portfolio called away this weekend.  Our Long-Term Portfolio subscribers have sold four positions this week.  Our SwingTrader subscribers have two short positions out of a total of four.

We don’t think the market will fall too far, but a correction is in order.  If we get hit with some bad headlines out of Europe, the trap door could open!  You don’t have to actively short the market to remove risk.  Moving to cash to wait on better entry prices can be a smart move after a strong market move like we have experienced.

Quote:
Bulls make money, Bears make money…Pigs get slaughtered.

Mailbag:
You article on hypothecation was absolutely riveting.---Long Term subscriber G.O.

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it is your money.  If you lose it, it is your responsibility, not ours or your grandmothers!  The editor may or may not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future.

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