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What if we miss the big bounce?

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by Peter Switzer

Another day without fiscal cliff fear and loathing, but there’s neither a desire to spurt higher nor an interest to sell-off, but it will always be like this.

Brace yourself for some action and it’s likely to come before December 17.

UBS legendary NYSE broker, Art Cashin, who I interviewed on the floor of Wall Street’s famous exchange when I took my TV show to New York two years ago, has underlined that date.

Talking on CNBC, he said President Barack Obama is set to go to Hawaii for his family holiday and the Inland Revenue department will need to get tax documents in place for big corporations to pay their right, and possibly new, tax rates, so expect something before that day.

He thinks there will be an “explosion” either way, which makes it hard for us to play and it’s because of this expectation the market has been avoiding big sell-offs. You see, like me, most experts believe a deal will be struck and that should help stocks spike higher but in true doubting Thomas fashion, we want to see some proof.

Best guess

In a perfect world we would like to buy in before the bounce and then get the full measure of the rally, but in reality the safer option is to wait for the good news to arrive and then buy in as I reckon it will be the start of a solid rally over the first couple of months of 2013.

That’s my best guess and if you are whinger who hates losing money, that might be your best strategy, but remember it’s based on my best guess.

By the way, markets can be quirky if the cliff negotiations are resolved, but if they’re not universally liked, there could be an early sell-off, but I’d be a buyer then.

I will be a buyer if I miss the first bounce and I’d be a buyer even after a big fall because I always like to buy the companies I like when they look like good value.

This is a tricky time, but my overall strategy is linked to my belief that stocks head up next year, even if there are periods when they trend down and these will again be buying opportunities.

This strategy has worked since early March 2009 and one day it won’t but once again that will only be temporary as I always buy good companies that rise in price more years than not. And they have a history of paying dividends and so they’re the gifts that always give!

Jobs report in focus

The Dow again went up and down before ending 39.55 points or 0.3 per cent higher to 13,074.04. The S&P 500 increased 4.66 points or 0.33 per cent to 1413.94.

The big news issue will be the jobs report out overnight and so Saturday morning will show us the market reaction to the numbers. That said, it will still have to compete with the fiscal cliff issue and only a seriously bad or good result could distract Wall Street’s preoccupation with Congress.

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Watch more from Peter on SWITZER TV.

Published on: Friday, December 07, 2012

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