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In case it is not glaringly obvious to you, the bear rally is still alive. Fundamentals have taken a back seat as investors continue to buy into the recovery story.
The rationale goes like this - the stock market is a barometer for the future and investors buy stocks based on future earnings power. If there are indications the economy is about to turn the corner, it is wise to invest heavily six to months in advance.
For those sitting on the sidelines, the temptation is overpowering. On one hand, they have significant funds to deploy and are itching to get their hands on long-awaited profits (or at least to cover losses from 2008) but at the same time, grossly worried that the uptrend is about to reverse in a drastic manner.
Actually, throwing money back into the stock market and engaging in some momentum trading is fine provided there is an exit strategy. You have to check your greed, sell into the rally and apply stop-loss orders.
Bank of America reported first quarter results that eclipsed its achievements in the whole of 2008. Its champange performance was promptly offset by news that it was adding $6.4 billion to reserves for bad loans.
In view of the larger provision, investors should exercise greater caution going forward. Nevertheless, the bear rally refuses to die. For that, we have to salute Wall Street for engineering such a robust stock rally. Do not forget though, that in the same manner this logic-defying rally is created, the liquidity can exit in a flash if the big boys pull the stop. Read more...[caption id="attachment_2200" align="alignright" width="192" caption="Photo by respres"][/caption]
In case it is not glaringly obvious to you, the bear rally is still alive. Fundamentals have taken a back seat as investors continue to buy into the recovery story.
The rationale goes like this - the stock market is a barometer for the future and investors buy stocks based on future earnings power. If there are indications the economy is about to turn the corner, it is wise to invest heavily six to months in advance.
For those sitting on the sidelines, the temptation is overpowering. On one hand, they have significant funds to deploy and are itching to get their hands on long-awaited profits (or at least to cover losses from 2008) but at the same time, grossly worried that the uptrend is about to reverse in a drastic manner.
Actually, throwing money back into the stock market and engaging in some momentum trading is fine provided there is an exit strategy. You have to check your greed, sell into the rally and apply stop-loss orders.
Bank of America reported first quarter results that eclipsed its achievements in the whole of 2008. Its champange performance was promptly offset by news that it was adding $6.4 billion to reserves for bad loans.
In view of the larger provision, investors should exercise greater caution going forward. Nevertheless, the bear rally refuses to die. For that, we have to salute Wall Street for engineering such a robust stock rally. Do not forget though, that in the same manner this logic-defying rally is created, the liquidity can exit in a flash if the big boys pull the stop. Read more...
[/caption]
In case it is not glaringly obvious to you, the bear rally is still alive. Fundamentals have taken a back seat as investors continue to buy into the recovery story.
The rationale goes like this - the stock market is a barometer for the future and investors buy stocks based on future earnings power. If there are indications the economy is about to turn the corner, it is wise to invest heavily six to months in advance.
For those sitting on the sidelines, the temptation is overpowering. On one hand, they have significant funds to deploy and are itching to get their hands on long-awaited profits (or at least to cover losses from 2008) but at the same time, grossly worried that the uptrend is about to reverse in a drastic manner.
Actually, throwing money back into the stock market and engaging in some momentum trading is fine provided there is an exit strategy. You have to check your greed, sell into the rally and apply stop-loss orders.
Bank of America reported first quarter results that eclipsed its achievements in the whole of 2008. Its champange performance was promptly offset by news that it was adding $6.4 billion to reserves for bad loans.
In view of the larger provision, investors should exercise greater caution going forward. Nevertheless, the bear rally refuses to die. For that, we have to salute Wall Street for engineering such a robust stock rally. Do not forget though, that in the same manner this logic-defying rally is created, the liquidity can exit in a flash if the big boys pull the stop. Read more...
