THE MARKET MOOD
The GO-sign indicator remains in the “on” position this month–and the market is touching all-time highs. Still, with slowing global growth, European banks in the doldrums and interest rates at new lows, many people are quite nervous about where the market will go next. But it is important to ignore the headlines and simply follow the system. Now is the time to allocate most of your money towards stocks. Of course it depends on how close you are t o needing the money you are investing. Here are some simple rules. First, if you have more than 15 years before retirement, put 60-100% of your money in stocks (whether through mutual funds or index-ETFs). Second, if you have less than 5 years to retirement, you may increase your exposure from 0 to 25% stocks, but no more than that. Third, anywhere in between 5 and 15 years then make your allocation between 25% and 60% depending on your tolerance for fluctuation.
Despite the Brexit, the Go-Sign indicator held through the month of June and looks to continue through the month of July. At this moment it would take a full 6 weeks of bearish behavior in the markets to turn that signal around, so things look optimistic for the second quarter earnings season. Investors simply aren’t fleeing to safety (with the exception of European currency investors), so the U.S. Stocks are likely to move higher from here.
Caution buys are a good idea right now. Nobody wants to be positive, every investor seems to want to worry: this is exactly the condition in which a bull market likes to climb higher.
Brexit is behind us (so far) and the market is bullish. The S&P 500 Index has punched above 2140 and even moved above 2150 (July 12) making a new all-time high mark –a positive. We are moving into Q2 earnings season, and that will rock the boats (indexes) higher and lower as large caps announce and we determine if earnings can keep steep with higher valuations. When entering new positions, be careful not to choose stocks that are overbought, or have recently shot higher in a parabolic move that will soon succumb to profit taking. Chose companies with reasonable valuations and steady earnings records. and above all, keep green on your screen.