July 12, 2013:
The Stock Market is back into a confirmed uptrend.
The Dow and the S&P 500 made new closing highs today. The markets have already priced in an interest rate hike, although the Fed has not yet acted on its announcement of tapering its bond purchases. Fears of continually rising interest rates have subsided, and investors have decided that any actual interest rate hikes will be small and not enough to endanger earnings growth in any major way.
In addition, stocks got a boost yesterday from Fed Chairman Bernanke saying that the economy is not quite ready for them to reduce their bond buying program. Thus, the stock market is back to making new highs.
Subscribers should have been using the last couple of months to find suitable stock picks:
For growth stocks investors, this means finding stocks breaking out of established chart patterns.
For income investors, this means looking for stocks that have found support at the 50-, 100-, or 200-day moving averages.
Most income producing stocks have taken a beating over the last couple of months, as expectations of rising interest rates hit these sectors hard. Please see the previous post for more info on stocks and rising interest rates.
This can mean some great entry points into these long-term investments. Many have declined more than 20% from their high just a couple of months ago!
This could also be a great time to start an initial purchase of bond funds, especially muni bond funds. Prices have declined more than 20% from recent highs, and this in turn has created higher yields. Many closed-end muni funds are yielding near 6%, which is a greater than 8% after-tax yield for many investors.