2013 Is Off to a Strong Start

For the last few weeks I’ve cautioned investors to ignore the hype about the Fiscal Cliff. Eventually, I believed, some deal would be reached, and late last night, that’s exactly what happened. Here are the details.

It wasn’t pretty and not everybody got what they wanted, but compromise is the cornerstone of democracy. Plus, there will be more battles ahead on the debt ceiling.

The good news is that the markets are responding very well this morning. The S&P 500 has been as high as 1,457.53 this morning. That’s a 2.2% jump and it brings the index just eight points shy of its highest close since 2007. On our Buy List, Oracle ($ORCL) is up to an 18-month high this morning.

big.chart01022013

Today’s rally is what’s called a high-beta rally which means that the leaders are small-cap stocks plus industries like tech (like Oracle), finance and cyclicals. High-beta rallies usually (but not always) tend to pull along lower-quality stocks with them. There are lots of sketchy names among small-cap tech stocks. Since our Buy List is concentrated among high-quality stocks, we tend to lag the broader markets on days like this. The Russell 2000, which is a popular index of the small-cap sector, is up to an all-time high this morning.

Still, our Buy List is beginning 2013 on a strong note. Every stock but Ross Stores ($ROST) is higher today. I was pleased to see that CR Bard ($BCR) was upgraded by JPMorgan today. (The Buy List is so new I haven’t had time to enter in comments for the new additions. I’d better get on that.)

On the economic front, the ISM Index for December rose to 50.7. If you recall, the number for November was 49.5 which was a dud. Any reading above 50 means the manufacturing sector is expanding. Below 50 means it’s shrinking. The worry zone doesn’t really kick in until the ISM drops to 45 or so. The next big report will be Friday’s jobs report.

Posted by on January 2nd, 2013 at 10:52 am


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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