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Stocks look to open higher this morning, buoyed by earnings from Alcoa this past week, the fact that Australia raised interest rates signalling strength in emerging market economies and the belief that this coming earnings season, which will commence in “earnest” this week, will provide upside surprises. Tack on the fact that thus far we are navigating through the historically treacherous month of October thus far without incident and the result is the path of least resistance is to the upside.
Despite the above, an investor much remain ever-vigiliant, recognizing that the market tends to fool most of the people most of the time so we will look for chinks in the armor to this bullish outlook, perhaps a key earnings miss from one of the bellwethers reporting this week (JP Morgan Chase, Intel, General Electric) or perhaps a less than rosey outlook from one of these or any other company.
The bottom line, at this time we recommend investors look to add to equity positions (no-load mutual fund, individual stocks) on pullbacks and be careful of grasping for yield by extending durations in the fixed income market.