01/19/2011
Stocks continue to push higher in 2011, and in just the 12 trading days that we’ve had so far this year, the S&P 500 Index has jumped more than 2%. Of course, that gain comes on top of the tremendous December that we witnessed in the broad-market measure. To be certain, stocks seem to be on a roll. Even Monday’s news that Apple (AAPL) CEO Steve Jobs would be taking a medical leave didn’t stop the broad market from enjoying nice gains on Tuesday.
Now that earnings season is in full swing, we are likely to see some big numbers posted by a bevy of high-profile companies, and that is liable to keep stocks moving higher in the days and weeks ahead. However, I think that after earnings season peaks, we could get a bit of a glitch in the market matrix.
I suspect that during the next four to six weeks, stocks will take a bit of a short-term breath and begin seeing some selling. After all, it’s logical that once the catalyst of earnings has faded -- given the tremendous rise in equities we’ve seen since September -- sellers would step in and take some profits off of the table.
If we do see this happen, I actually will be smiling. The reason why is that I think any kind of mild pullback will set the stage for even bigger gains going forward. Simply put, this market is going to need some consolidation and some cash-raising activity to keep powering higher, and that’s what I think we are going to see over the next month and a half.
My advice to you is to be prepared for a pullback, and to have some cash on hand to jump on stocks at a reduced price. If you’d like to know how subscribers to my Successful Investing advisory service are positioned to profit from current market conditions, then simply click here.