The market is not delivering the big rally we have all come to hope for and expect as investors get into the buying mood at this time of year, even on Wall Street.
Homebuilders expressed some sour sentiment about the prospects for their business in the New Year, and that news was not received well by the equity markets, especially those in the riskier areas, i.e. the tech stocks and small caps. Rising mortgage rates and softening demand are cited as the culprits for putting a damper on their prospects going forward.
I am still looking for the Dow to make a run at the 11,000 mark before the end of the year, but if the market weakness continues, Fabian followers may end the year in a more defensive posture. The key support levels here are 1250 for the S&P and 2200 for the Nasdaq. Should those indices break below those levels, we will be watching our positions carefully for weaker markets ahead.
We sold our biotech position in the Successful Investing Plan last week, but we remain nearly fully invested with positions in both the broad market and the international indices. I am of the opinion that we will undergo a market decline as a result of the economic landscape. However, when such a decline will actually unfold remains to be seen, so we watch and we make money while the opportunity is still there to do so.