Wednesday, February 16, 2011

S&P 500 Reaches Milestone From March 2009 Bottom

The market is higher again, and there is a reason than some people have been watching this SPX 1334 level. You see, at the bear market bottom reached in March 2009 the SPX touched 667. Today, less than 2 years from that low, the market has now rebounded fully 100% from the bottom.

To be clear, the market is up 100% from the bear market bottom, but has yet to fully recoup all of its losses. It still needs to get back to SPX 1576, which would require an additional 18% rise from current levels.

The march higher in recent months has been relentless, and it certainly feels like each small dip is being bought as the fear of missing out on future gains is finally beginning to set in. Not to mention that stock funds saw 3 consecutive years of outflows at the expense of bond funds, so a reversal of that trend would be normal.

In corporate news, there were more good earnings reports last night. Deere (DE) topped estimates and raised guidance; ditto for DELL, and Comcast (CMCSA) also had a strong report. All of these stocks are nicely higher today.

Markets in Asia were higher overnight; the dollar is up slightly so far, and commodities are mixed; oil prices are lower near $84.80, while gold prices are higher to $1371.

The 10-year yield is a touch higher at 3.63%; and the VIX is down -3.1% so far to 15.86.

Trading comment: Sometimes the hardest thing to do is just do nothing. Sit tight and let your winners run, as they say. Famed investor Jesse Livermore said that he made his biggest gains by just sitting on his hands. It is very tempting to take profits on things, but the best course has been to hold. I took profits on MERU the other day, as I felt the big spike higher would surely be retraced. But after a very brief pause, it is much higher again today (without me).

long DE


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