May is coming to an end this week and I’m wondering where have all the bargains gone! The last week saw the S & P 500 push to a new record and on this side of the earth, the stocks I’ve been trading / watching like banks ANZ, CBA have all been hovering at their 52 week highs and BHP not far behind it’s own high.
What is coming around in the news is that the recent volatility is showing investors on a “merry-go-round”. Hopping from momentum stocks like Facebook to undervalued stocks and also selling in small caps to the more solid, conservative stocks like good old Pepsi Cola whose chart looks like it has defied the selling from March – check the chart here.
Of course this leads many to think about the “Sell in May and Go Away” phenomenon not happening, but let’s pause for a moment why that could be. You read about slowing growth everywhere – China, EU are prime suspects, so it is looking like the US even with sputtering growth in jobs and manufacturing looking better with stronger housing and consumer sentiment coupled with low inflation. In short, when before money need to be moved elsewhere in other assets, it’s finding situation cozy enough where it is, in stocks.
I’m still not going on any buying spree with the bargains all but nowhere to be found in this traditionally difficult (ie volatile) season, I’ve halved my usual positions given the uncertainty — shorting CBA as it in the top of its range and holding a long position in BHP, ensuring the gain I can get is 3 x my Initial Risk, plus whenever I check at new stocks, looking over valuations and avoid getting dumped!
Check out the articles below.
http://www.bloomberg.com/news/2014-05-23/s-p-500-rises-for-week-to-record-amid-optimism-on-economy.html
http://www.bloomberg.com/news/2014-05-23/u-s-retailers-missing-estimates-by-most-in-13-years.html
http://www.bloomberg.com/news/2014-05-23/buffett-too-rich-for-buffett-is-sign-bargains-are-gone.html
http://www.businessweek.com/articles/2014-05-22/ibms-eps-target-unhelpful-amid-cloud-computing-challenges#r=rss
http://www.bloomberg.com/news/2014-05-14/ibm-says-tech-shift-impact-similar-to-financial-crisis.html
http://www.bloomberg.com/news/2014-05-23/sales-of-new-u-s-homes-increased-6-4-in-april-to-433-000-pace.html
