Market Trends Still Uncertain

01/10/2014 12:01 am EST

Focus: STOCKS

Jim Jubak

Founder and Editor, JubakPicks.com

Despite the rosy market scenario from many analysts, MoneyShow's Jim Jubak thinks the market still has some unresolved issues as we head into earning's season.

Think about it. If you have any doubts about what the market was going to do in 2014, here is what you are confronting. You have profits that you didn't take in 2013, they are still on paper. If you sell now, you are not going to pay taxes on those profits for a year. It lets you move out of the market. It lets you, sort of, sit on the sidelines for a little while and see whether the market is going to come down and give you a better place to re-enter. It is basically, sort of, a no cost, very low risk way to de-risk your portfolio for a little while, while you figure out what is going on, until you see what the trends are for 2014, and because, the trends right now are so uncertain.

We have strong data suggesting that the US economy and other economies are going to grow more than expected. We have had enough data to, sort of, cast doubts on that. We are seeing January is the first month where the Fed is actually going to taper on taxes, purchases, so no one knows what that means, so all of those uncertainties mean, well, you know, “Gee, if I would like to take a little less risk, this is a good way to do it.”

We have had profit taking. We have had sells. We have had analysts coming out and saying this stock or that stock is a sell on valuation. We haven't seen that in a while. All of those things have, sort of, characterized the first couple of weeks of 2014. The issue is how long that lasts, how long that mindset lasts, and particularly, whether the beginning of earning season—and earning season started on January 10 with Alcoa's announcement—whether that sort of shifts the tension in the market. This is what I am looking forward to figuring out as we go into the middle of January and beyond, how long this profit taking lasts, what the effect of earning season is on these expectations, and really, what kind of trend that starts to put in place for further down the road in 2014.

This is Jim Jubak for the MoneyShow.com video network.

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