PreMarks-Friday the 13th Edition

Markets are set to open to the downside, capping the worst week for stocks in 2012.  Disappointing Chinese GDP numbers are mostly being blamed for the sour action but I still think that what we are trying to do is work the markets off of an intermediate and longer term over bought condition. 

We raised our shortest term view to NET MARKET POSITIVE while leaving the intermediate view at NET MARKET NEUTRAL in order to reflect what we were doing in the actual world of money management.  I would also note that nearly 80% of the money that we invested earlier this week was for new clients or assets that have been added to accounts so far in 2012. 

Stocks in general are up 2-3% since that post and that colors me less bullish in the very short term although I will not change our view quite yet as we are not yet over bought via our shortest term measurements.  What I think stocks are in the process of doing is carving out a range where they are going to trade for the next few weeks or months.  We will need further information during earnings season to determine yet whether there is some sort of top in for a longer period or if this is just the pause that refreshes.  What we are beginning to get a sense of though is that there is now a definite band of resistance about 2-4% points higher in most major indices and stocks and that could prove to be a hard barrier on the upside in the near future. We will look for earnings season to provide some clarity as to this future direction in the next few weeks.  

Irrespective of the short and intermediate viewpoints I still think stocks have the potential to advance by the end of the year.  We'll pick that point up next week in the Q&A.  After that I'm going to expand the series to discuss the advantages of ETFs and how we use them in our portfolio strategies.