Friday February 15, 2013
Stock Market Commentary:
Monday-Wednesday’s Action: Stocks Pause
Thursday & Friday’s Action: M&A Picks Up
Stocks fell on Thursday after GDP fell in Europe and Japan. Overnight, Japan said its economy contracted by -0.4% in Q4 2012 which missed the Street’s estimate for a gain of +0.1%. The euro was smacked after the latest data showed that Europe fell further into a recession. Euro zone GDP fell by -0.6% in Q4 2012 which was the largest drop since Q1 2009. For the year, Euro Zone GDP fell -0.5% in 2012. There was a flurry of M&A activity announced. AMR and LCC merged which formed the largest airline in the country. Separately, HNZ was acquired by Warren Buffett’s Berkshire Hathaway (BRKB) and a private partner 3G. Stocks were quiet on Friday as investors awaited the G-20 Meeting in Russia.
Market Outlook: Uptrend
From our perspective, the market is in a very strong uptrend which bodes well for both the market and the economy. As always, it is extremely important to be flexible in your approach and change when the facts change (Thank you Mr. Keynes). For those of you that are new to our work, on October 9, we said “the rally was under pressure” and then said the “rally was over” on Oct 19. Immediately after that note was published, stocks fell sharply and a lot of technical damage occurred. Then we put out a note on Friday, November 16, 2012 (the exact low for this move) titled, “Time For A Bounce” and the rest is history. Stay tuned as we will continue to keep you in sync with the market and ahead of the crowd. As always, keep your losses small and never argue with the tape.