Stocks Meander Sideways Before The September 2012 Close Of The 3rd Quarter, Money Managers Will Chase Performance:
Stocks barely moved today and rebounded off of the lows in the early part of the session as traders await housing news tomorrow and Fed estimates of GDP this week. U.S. equities are behaving normally after running up when the Fed announced its new bond buying program but most market participants steered clear from the market in the last few months believing a strong pullback would occur. Shorts have been vocal even after the ‘sell in May and go away’ cliche didn’t work this year and global central banks infused the world with liquidity.
We are bullish on stocks and believe the fourth quarter will begin with a bang. Google reached an all-time high which was good for tech even though the NASDAQ was down nearly 20 points ending the day at 3,160. The strength in Google and resilience of Apple bodes well for the market short-term. The small cap exchange traded fund IWM remains above our target levels which suggests traders should get into the market before the end of the month.
September could end on a positive note because most money managers are underperforming which we have noted several times. Here’s what we posted before the Wall Street Journal article recently that said money managers could sit out the 4th quarter 2012. The majority of them could be punished for doing so.
Right now portfolio managers are telling clients why they haven’t bought the XLF which is up 25 percent this year and the Federal Reserve Bank did an “Operation Twist” and aQE3 along with an announcement from Mario Draghi that the ECB would also be buying bonds. Some managers have decided to be early shorts and ‘fight the Fed’.