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Spring Forward...

Spring is almost here. While many may balk at losing one hour of precious sleep on Sunday morning, I always look forward to day-light-savings as it gives more day-time to enjoy Sun!
Spring means we can start looking forward to many things - wrapping up school and other kid activities, summer vacation, summer movies, IPL cricket season and don't forget stock market churn.
This year markets are following the script almost to the letter. As historical data suggests, markets perform best during Oct to Apr cycle and perform worst during Apr to Sept cycle. If that pattern repeats, we are at end of cycle. With all indices recording multi-year highs with DOW even reaching all-time high, it is time to be careful. Most likely over next week or two, S&P would reach all-time high and possibly may try to breach 1600. After that market participants would realize that markets have reached too high too quickly. With Q1 wrapping up, markets would become cautious and start trending down. By early May, I won't be surprised if S&P comes below 1500 (DOW below 14000). Summer and early fall months would be volatile as always. Once all this churn is over, in Q4, markets would reach calm-waters and DOW would cross and close above 15000. When it comes to individual stocks, check out some of the home builder stocks like HOV ($6), BZH and MLPs like SDR, SDT ($14) as well insurance company like GNW (below $10).
Surprisingly politicians in Washington have become slightly wiser and actually trying to come to a solution to fiscal mess. There are some positive indications from both sides with President Obama finally trying to do some schmoozing (he invited 12 GOP senators for dinner) to break the ice between his administration and congress. Hopefully this would help reach some kind of grand bargain on long-term deficit problem US is facing. When it comes to Europe, I am surprised that Italian elections did not cause much panic in EU land (as of now Rome needs new PM and new Pope). All the credit goes to two bankers - Ben and Mario. These two bankers came to save the world from great recession.
/Shyam

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