Big news hit the major stock indices this week as the Dow Jones Industrial Average not only reached, but held onto, 11,000. Tuesday’s trading found the markets digesting broad-based consolidation, but they were still able to stay above that crucial psychological barrier they have not seen since 2001.
The Dow Jones, S&P 500 and Nasdaq indexes have all made bigger gains in the first full week of trading for 2006 than they delivered for the entire year of 2005. So far this year, the Dow, S&P and Nasdaq are already up 2.7%, 3.4% and 5.1%, respectively, for the year. Even a 16% year-over-year loss from material giant Alcoa was not enough to knock the markets off their newfound pedestals.
Big news from Apple and Intel continue to fuel technology’s ascent, and energy is extending its gains with that sector showing an impressive 6.1% return since a week ago yesterday. Large caps may be emerging from the doldrums as run-ups in both the Dow and the S&P 500 give buyers some reason to believe that this may be the start of the real thing.
Is it? All technical signs say yes. There seems to be some fundamental strength allowing the market to hold onto gains in the wake of disappointing news. I am very optimistic about this market and as I feel the momentum firmly at my back, I have instructed my Successful Investing subscribers to commit 100% of their investing dollars to this market. We have been amply rewarded for our efforts. Remember, that’s the beauty of being a trend-follower, you can follow the gains as long as they last and then step out of the markets when they begin to break down.
The short-term strength we are seeing has given us some wonderful gains. Just six weeks ago, I issued buy recommendations to my subscribers to deploy 25% of their portfolios to the diversified ETFs of both Japan and South Korea. The results have been intoxicating. We are up 17% in each of those funds. I have just issued a third buy recommendation to that arena, which brings our international allocation to a profit-seeking 37.5%. By the way, the fund I recommended just last Friday was up over 1.5% in the first day we owned it!
If you want to get in on that kind of profit action and protect your nest egg while you’re doing it, try Successful Investing. Want a peek at what we’re doing right now? Check it out:
There are some nice, tidy profits in today’s markets. However, I urge my readers to not become complacent about the current rally. Risk has a tendency to rear its ugly head when you are least expecting it. I am fully invested and loving every minute of it because I know that I have a plan in place to exit this market if and when it turns south so I can protect profits. Make sure you have your exit strategy firmly in place and then you can just enjoy the ride.