Major ETFs rose slightly in quiet trade Monday as the market
awaited the central bankers meeting in Jackson Hole, Wyo. for
clarity on what they'll do to support the economy.
In afternoon trade, theSPDR S&P 500 (
) added 0.18%.
SPDR Dow Jones Industrial Average (
) was nearly flat, down 0.07%.
PowerShares QQQ (
), a basket of the 100 largest nonfinancial stocks on the Nasdaq,
rose 0.24% thanks in part toApple's (
) 2% gain following its legal defeat of Samsung. The consumer
tech giant accounts for nearly 20% of the QQQ and about 4% of
Market strategists overall see a running of the bulls and
expect the Federal Reserve to unleash more quantitative
Alex Gurvich, managing partner at the Rockledge Group in New
York, expects the recent rally to continue as the market awaits
Fed chief Ben Bernanke's speech this week, which may confirm more
economic stimulus is on the way.
Should the market hold at its 2012 highs, a big short-covering
rally could drive the S&P 500 to its next level of price
resistance at 1576 or its 2007 high, up 10% from the current
level, says Douglas Stewart, a portfolio manager at Sherwood
Forest Capital Management in Richmond, Va. Short-covering occurs
when traders, who bet on profiting from declines, have to buy
shares to close their positions.
"The Fed has made it abundantly clear that if something bigger
to the downside occurs, that they will be there to rescue the
markets, so as to prevent another leg down in the confidence in
the domestic economy," Stewart said.
The S&P 500 may top 1500 over the next two months and hit
an all-time high in the first quarter of 2013, says Mark Arbeter,
chief technical strategist at S&P Capital IQ.
"Market conditions are ripe for a new secular bull market to
emerge, potentially ending the massive trading range that has
been in place since 2000," Arbeter wrote in his weekly technical
report. "A break to new recovery highs will force some bearish
advisers and investors to throw in the towel, adding fuel to the
stock market rally."
Expect the S&P 500 to pull back briefly and rebound to new
highs, says Randy Frederick, managing director of active trading
and derivatives at Charles Schwab.
) small pullback in the S&P is by no means a problem in a
market that is up 10% in three months and hasn't even had a 1%
down day for 24 straight sessions," Frederick wrote in a media
note. "Remember, markets never go straight up and small pullbacks
are healthy as they often help to avoid bigger ones."
"With the European Central Bank, the U.S. Federal Reserve, the
Peoples Bank of China, and even the Brazilian government,
standing in the wings ready to take action to support their
respective economies, the downside risks in the market remain
quite low, so, in my opinion, the greater risk is still in
missing out on the upside," Frederick added.
Despite the market's robust gains this summer, retail
investors keep flocking to safe havens in gold, high-yield bonds
and municipal bonds. Gold and precious metals fund inflows hit a
29-week high, according to EPFR Global. Municipal and
mortgage-backed bond funds extended their current inflow streaks
to 51 and 75 straight weeks, respectively. Inflow into bond funds
totaled $4.9 billion -- of which 61% flowed into U.S. bond funds.
That's while $847 million was pulled from equity funds.
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