The major US indexes have been steadily marching ahead since October 2011. Since the brief correction in December 2011, the S&P 500 has consistently logged a higher high in last 2 months.
We do see some sign of the markets losing steam with the upside in weekly increase becoming less robust.
The NASDAQ continues to show better traction which is good for growth in general.
In our view, Apple’s phenomenal rise in recent weeks has been an important reason for this index to display relative strength.
The S&P 500 has not shown convincingly positive performance at these highs.
The earnings season is drawing to a close. From a growth perspective, the latest GDP reading has been at 3%. This, though very encouraging, has been somewhat sub optimal.
To be sure, these are 4th quarter 2011 readings but they do give a sense of what to expect for the 1st quarter of 2012.
We are not yet expecting the economy to fire on all cylinders this quarter. The economy appears to be regaining its footing steadily at this point.
We do believe the markets are due for a pullback to consolidate these recent gains. We can expect a very sharp pullback if for some reason US Gasoline prices continue to rise sharply from these levels.