After two strong years equity markets are sitting in a slightly overbought status. Technical indicators are flashing 'pause' and sentiment indicators are in areas which usually precede a correction. Looking back over some historical indicators there is reason to be bullish for 2011.
We are currently within the sweet spot of the four year Presidential cycle for the equity markets as the 4th Quarter of Year 2 and the first 2 quarters of Year 3 have the best returns. This means that the current rally should last into April at the very least at which time investors should look to book some profits and take money off the table.
Overlaid on the Presidential cycle is the decennial cycle in which years ending in 1 are mostly negative.
What may cause the current rally to run out of steam? The end of Bernanke's QE2 in the second quarter of 2011.
Valuation metrics, while on the high side are still attractive. Global multinational firms are showing strong profits on the back of a weaker dollar and increased sales penetration in the BRIC countries. Both factors should continue to drive profit growth in 2011.
Every 3rd year of the Presidential Cycle since 1939 has been positive which makes it likely that 2011 is an up year as well. more ...
Tidak ada komentar:
Posting Komentar