The market was up over 1.5% yesterday on the heels of better expected retail sales numbers, as well as information released by the Federal Reserve that showed how the U.S. banking system has stabilized and looks poised to grow and regain the profitability the sector once exhibited. That being said, stocks are mostly flat on the day, with the majority of the financial stocks trading down as investors take their short term gains. As I've written a hundred times, the best way to profit in this up and down market is to buy on selloffs and sell on big up days. I would not get too aggressive in buying stocks (or mutual funds) right now as I believe we are do for a slight pullback. While I am positive on the prospects for the economy, we are still seeing the economy crawl out of the mess we've been in over the past 4 years, and therefore one needs to cautious until we start to see the economy gain some momentum. On another note, while the advance in stock prices has been impressive, volume in the markets has been a fraction of what it usually trades on average. Historically, big moves in the markets (up or down) are lead with big increases in trading volume. While I believe we will continue to see a reallocation out of bonds and into stocks throughout the year, I am keeping my eye on market volume to see what overall direction stocks will move in.
In other news, several of the money managers I work with are hearing takeover rumors on Etrade Financial (ETFC). Etrade is one of my biggest investment positions and I've been looking for the discount brokerage firm to be acquired by another financial institution for quite sometime now. I still think the buyout will occur, the only question to me is the timing of such. Interestingly of note, trading volume for the stock is higher than average today (this could be a good sign). For right now, I'm hoping the rumors turn out to be true!
