D&D Note (9-19-2012) ~ Is The Rally Running Out Of Steam?

D&D Note (9-19-2012)

The Initial jolt in both Gold and Equities from the recently announced QE3 seems to be running out of oomph. In other words most of the QE related gains were already baked into the market. The current rally is running out of steam, although we can still slowly melt up leading into the elections. The sell off in oil today does not bare well for the outlook in strength of the global economy.

The Central Banks have done everything they can to keep things bolstered, but sooner or later we are going to get a correction. They always happen, and are healthy for bull markets. But investors need to be aware that the event might not happen till post election, and you have to hedge your bets.

Winners today continued to be housing related stocks, and the major drag was energy related companies.

Apple (AAPL) is going to sell more iPhone 5‘s than they sold of any previous version according to initial estimates on pre-orders. The stock chart, nobody needs to see anymore – up and to the right. New all-time highs, happening everyday. But again the markets, including Apple, are all at overbought levels – begging for a reallocation of asset prices. Shares of the world’s largest company closed at $702.10 a piece today.

Looking forward and where D&D prefers to put current money to use in equities remains in Indonesia, Singapore, Taiwan, India, and China. Companies tied to the new iPhone 5 look to be potential short term winners. U.S. small caps and housing related stocks are on a tear. Gold remains a good hedge and Apple still needs to be every investors #1 stock to own. Invest in Apple, don’t trade apple. Be aware because the last time it fell was only in intra day trading and hit a low around $656. Also keep in mind profit taking should be expected soon in Apple with the stock hitting constant all time highs.

The real question about Apple should be; will it go parabolic again these next two quarters?

The Dow (INDU) ended up 13.32 points at 0.10%. The Nasdaq (COMP) gained 4.82 points at 0.15%. And the S&P 500 (SPX) added 1.73 points at 0.12%.

Oil fell more than 4% on the day closing at $91.98 a barrel which we haven’t seen since the beginning of August. Brent (the oil price that is much more relevant for the global economy) also slipped 4% today.

Gold rallied to seven-month highs after the BOJ (Bank of Japan) announcement of ending a minimum return on bonds they purchase but the Gold gave back gains after the US Housing report was released and is currently at $1,773.50 a troy ounce on the electronic board, $1,771.70 on the floor.

The 10-Year Note rose which pushed the inverse yield down to 1.77% from Tuesdays 1.81%.