Will The October 2012 Rally Gain Steam Again?
Stocks fell sharply for the last few days but tried to stage a comeback after the VP 2012 debate. The tech sector hasn’t helped the overall market gain steam due to some weakness in Apple and Google made a short term peak last week. We are looking for new leadership and anticipate some movement after the second presidential debate tomorrow. The short term weakness in stocks should be considered a buying opportunity if equities are set to rally due to the inevitable decrease in political uncertainty after the election no matter who wins.
The rangebound/decrease in stock prices recently is healthy for the market and may help it to rally to new highs after this brief consolidation period. Shorting stocks hasn’t worked most of the year and bonds are much less attractive now than in January or June of 2012. We will continue to look for bargains and the recent sector rotation that occurred a few weeks ago may be over as investors rebalance portfolios for November 7 2012. Our long-term outlook remains bullish and our short-term outlook has changed from neutral to bullish.