Investors afraid of missing out are jumping back into equities


Wow! Did you know that the the Nasdaq has moved up to or beyond its 200-day moving average? If there's one number that turns traders on it is the 200-day moving average. It creates a new confidence that all is well and it's safe to jump back into the stock market.

We've had two months of steady gains, and now investors who didn't have the courage of buy at the low are in panic mode. They want on board. They want a piece of the action. This is causing more sustained buying. We are just about finishing the mess of bank "stress tests" and this is adding a sigh of relief for the banking sector.

In other markets, the U.S. oil price is at a six-month high above $58.00 per barrel. The Baltic Dry Index, which tracks commodity shipping rates, has risen 50% in less than a month. Government bonds, viewed as a safe haven, have come under pressure. Usually when stocks rise, bonds fall.

Now the question is, can the momentum continue? The markets become a bit tricky here. You have loads of people who are locked in just above these levels and will take every opportunity to get out. So from here on in, you will find a fair amount of resistance.

Then too, you have the overriding question: Will a solid recovery take hold here or are we in an up phase without the needed follow through?

Would you buy stocks at these levels?

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IndexesChangePrice
DJIA+64.2212,865.45
NASDAQ+22.482,926.36
S&P 500+8.581,351.22

Last updated: February 13, 2012: 01:39 PM

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