{"id":37687,"date":"2013-04-19T11:24:33","date_gmt":"2013-04-19T15:24:33","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=37687"},"modified":"2013-04-19T11:24:33","modified_gmt":"2013-04-19T15:24:33","slug":"is-the-rally-over","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2013\/04\/19\/is-the-rally-over\/","title":{"rendered":"Is the Rally Over?"},"content":{"rendered":"<p><a href=\"http:\/\/sizemoreletter.com\/\" target=\"blank\"><u>By The Sizemore Letter<\/u><\/a> <\/p>\n<p>In the event you are too busy to read a full article this morning, I\u2019ll sum it up for you in one word: no.<\/p>\n<p>Yes, the S&amp;P 500 and Dow have backed off of their recent highs, and the recent slew of earnings announcements have been a little underwhelming.\u00a0 Goldmay be leading commodities into a full-blown bear market, which\u2014given the correlation in recent years between all risky assets\u2014is cause for concern.\u00a0 And when you throw in seasonal patterns\u2014we\u2019ve had great first quarters for the past three years followed by awful second quarters\u2014plenty of investors would rather sell first and ask questions later.<\/p>\n<p>If you are a nimble, short-term trader, it might make sense to take a little money off the table.\u00a0 And after a run like we\u2019ve had, it\u2019s never a bad idea to rebalance.\u00a0 But I think it\u2019s far too soon to make major portfolio moves.\u00a0 Hear me out:<\/p>\n<ul>\n<li>The seasonal patterns of the past several years have mostly centered around Europe.\u00a0 It seems that springtime is when the Eurozone falls apart, and this year hasn\u2019t been an exception.\u00a0 The Cyprus fiasco is just getting wrapped up, and Italy is still without a government.\u00a0 Yet bond yields continue to drift lower in the countries that matter most. Spanish yields are close to their lowest levels since late 2011, as are Italian yields.\u00a0While I don\u2019t consider the bond market omniscient, I do consider it more sophisticated than the stock market.\u00a0 And right now, the bond market is giving us all the right signals.<\/li>\n<li>The tight correlation between commodities and equities in recent years as part of the \u201crisk on \/ risk off\u201d trade is an anomaly.\u00a0 Yes, correlations are probably permanently higher than in years past due to the financialization of gold and other commodities via ETFs and other popular trading vehicles.\u00a0 But as the economy normalizes, \u201crisk on \/ risk off\u201d should give way to more normal relationships between asset classes. \u00a0I recommend investors steer clear of gold, as I expect a lot of continued selling from hedge funds and large institutional investors (see \u201c<a href=\"http:\/\/charlessizemore.com\/so-paulson-about-that-gold-stash\/\">So Paulson\u2026About that Gold Stash\u2026\u201d)<\/a>.\u00a0 But overall, I would not view gold\u2019s breakdown of a sign of things to come for stocks.<\/li>\n<li>The conditions are not right for a major bear market.\u00a0 Stocks, though seeing inflows from retail investors, are still under-owned, and sentiment towards them has been lukewarm at best throughout this rally.\u00a0 Valuations, though based on record earnings that might be temporary, are not high by any credible measure, particularly given the low inflation and low interest rate environment.\u00a0 Dividend yields among many blue chips are better than what you can find in the bond market and only marginally more risky.<\/li>\n<\/ul>\n<p>China is a worry, as is Japan.\u00a0 But at this time, I see no compelling reason to jump ship.\u00a0 For broad market exposure, I continue to like the <strong>Vanguard Dividend Appreciation ETF (NYSE:<a href=\"http:\/\/stocktwits.com\/symbol\/VIG\" class=\"ticker\"><span>$<\/span>VIG<\/a><\/strong>).\u00a0 For shorter-term tactical plays, I continue to like Spanish and French stocks, which can be bought via the<strong> iShares MSCI Spain (NYSE:<a href=\"http:\/\/stocktwits.com\/symbol\/EWP\" class=\"ticker\"><span>$<\/span>EWP<\/a>)<\/strong> and <strong>iShares MSCI France (NYSE:<a href=\"http:\/\/stocktwits.com\/symbol\/EWQ\" class=\"ticker\"><span>$<\/span>EWQ<\/a>)<\/strong> ETFs.<\/p>\n<p>Sizemore Capital has positions in EWP, EWQ and VIG. \u00a0This article first appeared on <a href=\"http:\/\/traderplanet.com\/\">TraderPlanet<\/a>.<\/p>\n<p><strong><a href=\"http:\/\/sizemoreletter.us2.list-manage.com\/subscribe?u=9d96acebea38ce5045e6823c8&amp;id=49e6f885bb\">SUBSCRIBE\u00a0<\/a><\/strong>to\u00a0<em>Sizemore Insights<\/em>\u00a0via e-mail today.<\/p>\n<div class='yarpp-related-rss'>\n<p>Related posts:<\/p>\n<ul>\n<li><a href='http:\/\/charlessizemore.com\/when-spanish-stocks-rally-they-rally-hard\/' rel='bookmark' title='When Spanish Stocks Rally, They Rally Hard'>When Spanish Stocks Rally, They Rally Hard<\/a><\/li>\n<li><a href='http:\/\/charlessizemore.com\/is-the-rally-in-junk-over\/' rel='bookmark' title='Is the Rally in Junk Over?'>Is the Rally in Junk Over?<\/a><\/li>\n<li><a href='http:\/\/charlessizemore.com\/for-a-year-end-rally-look-to-spanish-banks\/' rel='bookmark' title='For a Year-End Rally, Look to Spanish Banks'>For a Year-End Rally, Look to Spanish Banks<\/a><\/li>\n<\/ul>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>By The Sizemore Letter In the event you are too busy to read a full article this morning, I\u2019ll sum it up for you in one word: no. Yes, the S&amp;P 500 and Dow have backed off of their recent highs, and the recent slew of earnings announcements have been a little underwhelming.\u00a0 Goldmay be &hellip; <\/p>\n<p class=\"link-more\"><a href=\"https:\/\/www.investmacro.com\/forex-news\/2013\/04\/19\/is-the-rally-over\/\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;Is the Rally Over?&#8221;<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-37687","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/37687","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/comments?post=37687"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/37687\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/media?parent=37687"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/categories?post=37687"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/tags?post=37687"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}