Since the beginning of the year, market manipulators have not been successful to initiate panic sell-off. This is also one of the reasons that market can stay at current high level despite a lot of speculation that market should fall back.
The speculative trading portfolio does not perform well in this strong market. The majority of stock holding is in small/mid cap stocks, individual performance of which can be volatile and not tracking broad market. Unfortunately, the speculative trading portfolio has a bad selection and suffers quite a loss. The ETF portion of the portfolio follows broad market trend and generates some profit but insufficient to offset the loss in bad stock selection.
Current skills in stock picking is insufficient for speculative trading while there is still room for improvement in market tracking. The experience acquired in the last couple of years will be beneficial to future trading as history will repeat itself and market fluctuates in cycles. It appears that market is now in an upward trend against a wall of worry fueled by ample liquidity of capital as well as greed of investors.
The ABC’s of Reading Stock Charts
"All advances are not created equal," says legendary chart guru Louise Yamada. This is important to remember, even if obvious, during what has been the largely indiscriminate rally of 2012. From Tech, to Energy, to Banks; if a stock has remotely decent fundamentals and it isn't overly defensive, it's probably higher in 2012.
Yamada has guidance on how to let the charts be your guide. Her rules of thumb are easy as ABC, literally. She breaks up basic chart patterns into 3 categories.
A. All Stars
Charts rising above years of resistance with little in the name of headwinds.
As long as the uptrends don't break just hold the names and buy the dips.
B. Disappointments
These are stocks simply pushing into overhead and/or in danger of collapsing after sharp rallies. They may look good on the surface but there's nothing particular you'd want to be involved with for the long haul.
C. Take the Money and Run
Sharp rallies straight into overhead resistance and showing few signs of recovery. The rallies here have looked impressive short-term but are still chopping along and seemed destined to do so for years.
Investors Shrug at U.S. Small-Cap Surge
What if a major stock index jumped to an all-time high, but most investors didn't notice?
That's the awkward situation the Russell 2000 index of small-capitalization stocks could find itself in. The broad cross-section of smaller U.S. companies is up an eye-popping 36% since early October.
As with other U.S. stock classes, few investors these days are actively trading small-cap stocks, which typically have a market value of about $2 billion or less.
Trading volumes on Wall Street have been light for months, hedge funds and investment banks have pared down their trading operations, and the small investors that exited the market after the 2008 financial crisis are hesitant to jump back in—least of all to the riskier small stocks that make up the Russell.
As a result, the few remaining investors and traders are having an outsize impact on small-cap share prices amid the recent improvement in the U.S. economy.
But the air is starting to get thin. Because of the Russell 2000's surge, the small-cap index now trades at about 18.2 times forward per-share earnings, according to data from investment manager Heartland Funds. That is 43% higher than the S&P 500's price-to-earnings ratio of 12.7. Historically, the Russell has traded at a premium of about 30% to the Standard & Poor's 500-stock index.
Other warning signs include technical indicators that suggest small-cap stocks might have run up too fast. Some are also concerned that small-cap stocks could suffer down the road should the Federal Reserve ease off on its low-interest-rate policy, which has pushed investors into riskier assets like commodities and small-cap stocks.
Small-stock bulls say even the retreat from small-cap mutual funds isn't a bad sign. So far, the Russell 2000's rally appears to be fueled by corporate buybacks and investors reversing their bearish bets on small-cap stocks—not pouring fresh new money into small caps.
Short interest on the Russell 2000, a measurement of investors betting on a decline, fell to 6.6% in early February, down from 7.4% in September. Share buybacks among Russell 2000 companies jumped 46% in the third quarter from the previous quarter to $7.8 billion, according to J.P. Morgan's Mr. Singh.
In other words, buying of small-cap stocks so far remains restrained.
If the Russell 2000 can push through to record highs, that alone might trigger a wave of new investor interest. Hedge funds, in particular, are likely to move into more volatile investments like small caps if there is a sense that the market is climbing without them.
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