Tags: Gold | stock | fundamental | technical

MoneyShow.com’s Gold: Time to Reduce Stock Allocations, Take Profits

By    |   Tuesday, 30 April 2013 07:46 AM

Both fundamental and technical road signs are warning stock investors it is time to be prudent and take profits, according to veteran financial columnist Howard Gold.

Gold, editor at large for MoneyShow.com and a regular MarketWatch contributor, said the economy is weaker and the stock market is entering the riskiest time of the year.

“That’s right, it’s ‘sell in May and go away’ time on Wall Street,” he wrote. “And though the calendar hasn’t quite turned, I think now’s a good time to lock in some of your gains.”

Editor's Note:
See the Disturbing Charts: 50% Unemployment, 90% Stock Market Crash, 100% Inflation

Gold said some fundamental economic indicators have turned bleaker, notably jobless claims, retail sales and consumer confidence. He predicted higher taxes and the looming Affordable Care Act are taking a toll.

“Clearly, four years into an economic recovery, earnings growth is slowing. So, the first quarter was the strongest for stock buybacks since Birinyi Associates started tracking them in 1985. If you can’t boost [earnings per share] naturally, you can always reduce the number of shares outstanding, right?”

Gold cited a slew of cautionary technical signs. He suggested that experts believe the Standard & Poor’s 500, Dow Jones Transportation Index, S&P Small Cap 600 and Philadelphia Semiconductor Index are all overbought, fewer stocks are making new 52-week highs and late-cycle defensive sectors have recently been the market leaders.

U.S. stocks have jumped 17 percent since November, so the rally may be overstaying its welcome, according to Gold.

“That doesn’t mean getting out of stocks entirely. That’s almost always a bad idea. But it could mean taking some profits, cutting your stock allocation by 5 percent to 10 percent and waiting for a better opportunity to buy.

“Sometimes, the best advice is ‘no guts, no glory.’ And sometimes discretion is the better part of valor. I think the latter makes more sense now.”

At least one big financial player apparently is not following the “sell in May” bromide.

Goldman Sachs wrote in a note that it has upgraded equities to overweight over the next three months and said it maintains that position over the next 12 months, according to MarketWatch.

“Returns should be supported by a rebound in global growth, accelerating earnings growth and high-risk premia,” the note stated. “In our view, risks in the U.S. and Europe are now lower and the time that markets have to bridge towards the stronger growth outlook in the second half is shorter.”

Editor's Note: See the Disturbing Charts: 50% Unemployment, 90% Stock Market Crash, 100% Inflation

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Both fundamental and technical road signs are warning stock investors it is time to be prudent and take profits, according to veteran financial columnist Howard Gold.
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2013-46-30
Tuesday, 30 April 2013 07:46 AM
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