Another day, another crisis averted. Phew!
In case you were out and about or weren’t glued to your Twitter feed at approximately 8:00 am eastern time Tuesday, comments made by Russian President Vladimir Putin were the source of a second straight up on Wall Street. Within minutes of Putin saying he does not have an interest in acquiring any more Ukrainian territory, stock futures went from red to green. And just like that, the latest crisis appears to have been put to bed.
Okay, to be fair, that may be a bit of an oversimplification of the situation in Russia/Ukraine/Crimea. Remember, next week the G-7 is meeting to discuss what they are going to do about 96 percent of a region wishing to return to Mother Russia. And there is little doubt that there will be plenty of tersely worded statements, some sanctions, and maybe even an ultimatum or two. Remember, politicians hate to waste a good crisis!
Getting back to the stock market, the S&P has spurted higher this week and is within a stone’s throw of a new all-time high. But it is important to recognize that the venerable index may not home free just yet. You see, our furry friends in the bear camp are quick to point out that there is some resistance overhead on the charts, that this thing in Crimea probably isn’t over, and oh yea, China is likely to become to be a problem – and soon.
Insert Eye Roll Here
If you wound up rolling your eyes at that last sentence, join the club. Yes, the current bull market is growing older by the minute. Sure, Crimea, China, the Fed, the economy, or anything else for that matter, could easily become the next real problem for the market. And it is true that “trees don’t grow to the sky.” However, something the perma-bears hate to admit is there is an awful lot of money to be made when the bulls get on a roll.
Granted, risk is rising. And it is also true that the cycles are calling for a meaningful correction to begin sometime this year (somewhere in Q2 to be accurate). But staying out of the market because stocks have been going up for a while doesn’t make a lot of sense.
David Moenning is the founder and chief investment strategist for StateoftheMarkets.com, a website dedicated to investor education and portfolio analysis. Mr. Moenning is also President of Heritage Capital Management, a privately owned, investment management firm. Founded in 1989, Heritage is focuses on risk management and an “own the best and ignore the rest” equity selection strategy.
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Positions in stocks mentioned: none
The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management (HCM) and may not actually come to pass. Mr. Moenning’s opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security or Heritage Capital program. No part of this material is intended as an investment recommendation. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any of HCM’s programs. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that investment objectives outlined will actually come to pass. Investors should consult an Investment Professional before investing in any investment program. Neither Mr. Moenning or Heritage Capital Management nor any of their employees shall have any liability for any loss sustained by anyone who has relied on the information contained herein. Mr. Moenning and employees of HCM may at times have positions in the securities referred to and may make purchases or sales of these securities while this publication is in circulation. The analysis contained is based on both technical and fundamental research. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.