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I expect stocks will kick off the week by
extending Friday’s rally, and recovering more of the losses from last
week. After all, tomorrow is the first day of March. And stocks tend to
rally on the first day of the month.
There have been 22 months since the stock market
bottomed in March 2009. Stocks have rallied on 18 of them. That’s an 81%
success rate. In fact, the vast majority of stock market gains over the
last couple of years have come on those first of the month
rallies.
So if you took a trading position anticipating a
bounce from last week’s selling, you should probably hold it until at
least tomorrow afternoon. (That’s my plan with the Nvidia call options
I’m holding).
****In the week ending February 9, U.S. equity
mutual funds took in $4.92 billion. That was the biggest fund inflow
since May 2009. We can only hope all that cash didn’t get deployed right
before last week’s correction. Talk about bad timing.
Given the overbought state of the stock market in
general, I would suspect that fund managers held back a little, which
could help push stocks higher today and tomorrow.
*****Warren Buffett just released his annual
shareholders letter. He’s bullish and says his “trigger finger” is itchy
to pull off a new deal.
Buffett’s Berkshire Hathaway has around $38
billion in cash to deploy. His fund is generating around $13 billion in
cash a year.
Buffett apparently said that he believes America’s
best days are ahead.