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Sliding dollar helps U.S. stocks
The Tampa News.Net
Tuesday 7th February, 2012
U.S. stocks nudged higher on Tuesday, with a gain in the Dow Jones of 33 points.
The euro strengthened as a deal with Greece on its bond debt looked increasingly closer.
U.S. investors, as with their global counterparts, have been trying to come to grips with issues in the eurozone, while recognising recent economic data in the U.S. is showing signs of a turnaround at home.
"There's a tug of war between fundamentals, which are improving, and the macro backdrop of geopolitical risk from Europe," Andrew Goldberg, market strategist at J.P. Morgan Funds in New York told the Reuters Thomson newsgagency Tuesday. "We're still waiting on Greece, but at the same time we're almost being forced to pay attention to the improving data."
At the close of trading Tuesday the Dow Jones industrial average was up 33.07 points or 0.26% at 12,878.20
The tech-laden Nasdaq Composite climbed just 2.09 points or 0.07% to 2,904.08.
The benchmark Standard and poor's 500 index was up 2.72 points or 0.20% at 1,347.05.
From a markets perspective, rarely is the eternal pessimist ie the investor currently thinking the world is going to hell in a hand baskett.
On the other hand, things never seem to turn out quite as well as the permanently optimistic would have you believe.
Permanent "bullish" or "bearish" positions are simply not useful, Clem Chambers, CEO of stocks and shares information Web site ADVFN.com and author of "101 Ways to Pick Stock Market Winners," told us Tuesday.
"In investment, you must be able to swing from happy to sad. Doing so is essential if you are to be in phase with the market - and be right about your investment bias - more than 50 per cent of the time."
"This can be tricky," says Chambers. "You should be feeling bearish at the top of the market when everything looks great. Conversely, you have to be happy and optimistic just after a train collision of market and economic factors. I should be glad I'm starting to feel bullish. Encouragingly, the market is rallying. Although a correction does seems likely as the Dow arrives back at pre-2011 summer slump levels, it still feels like the start of a very good 2012. Market psychology appears to have made a strong reversal; terror has flipped to greed and I don't see why."
Chambers continued: "As CEO of one of the world's largest stock market Web sites I can see broad interest has rocketed in 2012, the same way it was chilled to the bone through the gloomy weeks of pre-Christmas euro crisis. Whatever the cause, something threw the switch and that is very bullish."
"The US recovery had been going on in the background over most of 2011. This recovery is only now popping up in the official numbers. The sudden shift in sentiment is still a mystery. The current rally is impressive, especially when you consider the supposed cause of markets' recent trouble (i.e the euro crisis) is still in the semi-random zone of political shenanigans.
If the market can rally like this then it can run a lot further this year. The crowd appears to be pre-empting dramatic economic improvements. Remember, the stock market looks a year out, so it is seeing 2013 as a year where the economy is good for stocks," says Chambers.
"This is, of course, good news for everyone. After so many years of increasingly grim developments it is about time for turning points to be reached."
"There are a lot of "perma-bears" disappointed the euro hasn't imploded, taking a large chunk of the world economy with it, the CEO said. "For a moment they were basking in the glory of prophets standing on the mountain top as the clouds part. Sadly for them, and happily for us, it doesn't look like the apocalypse is going to unfold. Instead, it looks like recovery is on its way."
"It still seems amazing to me after such a rough and dangerous economic ride that we could be in for a positive 2012," argues Chambers. "Yet all the pointers say there is light at the end of the tunnel and it's not a train coming the other way."
"As such, this "bear" is starting to moult his fur and grow horns," he says. "Optimism, of course, doesn't make such compelling copy as premonitions of disaster, but even if we are starting on the road to recovery there will be plenty of pot-holes on the path and precipices to look over along the way to keep it interesting."
The U.S. dollar was off sharply. Around the New York close Tuesday the euro had swollen to 1.3280, a more than 1% rise.
The British pound was last quoted at 1.5903, while the Swiss franc firmed to 0.9114.
The ever-popular Australian dollar accelerated up over the 1.08 level to 1.0803.
The New Zealand dollar was a touch higher at 0.8356.
The Canadian dollar inched up to 0.9945.
The Japanese yen went against the trend, drifting down to 76.78.
(More of Clem Chambers can be found at www.advfn.com )
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