Put two traders in a room, and one might scream to sell while the other puts in orders to buy. So who’s right? Well, they both could be—depending on the indicators they’re looking at and the kind of trading you want to do.
We’ve rounded up our InvestorPlace advisors to give you their read of the market.
Let’s get to the analysis:
John Jagerson and Wade Hansen, Slingshot Trader
The trend is looking very encouraging. While recent bullishness has been a surprise it also offers very interesting opportunities to buy bullish breakouts. We plan to continue looking for that kind of opportunity in the short term. There are, however, a few storm clouds that could be brewing that need to be monitored. On a day-to-day basis, China is trying to get a handle on the currency and export scandal that is emerging this week. If these problems turn out to be more serious than traders are expecting it could pause the trend. We like CurrencyShares Euro Trust (FXE) as a small hedge against that issue but it’s a position you should keep a close eye on.
Jon Markman, Trader’s Advantage and CounterPoint Options
I’ve mentioned that I see many similarities between 2013 and 1995–both years where the stock market rose inexplicably, in the face of terrible job growth, the Bosnian War and the Oklahoma City bombing.
Economic growth was certainly slow in the first half of 1995, but got traction in the second half of the year — and then the second half of the 1990s became legendary. But it all started with stocks sniffing out the success that lay ahead in the first half of 1995.
And I now wonder whether it is possible that the same investors’ instincts are collectively sniffing out an economic rebound in the second half of this year. Think about that. The view actually fits neatly with the remarkable rotation that we see going on in the stock market at this time, as shares of super-defensive drug and food makers slip while shares of super-cyclical materials producers and transports advance.
Ken Trester, Maximum Options
Our indicators are giving bullish readings, unchanged from last week. But one key change has taken place, and that is an investor rotation out of defensive, dividend paying stocks and into more cyclical and speculative issues. This kind of rotation is healthy for the market and also gives renewed hope to the economy, as cyclical stocks do better when the economy is growing.