Global Market Review 8 December 2013 Don Freeman Thailand
C A P I TA L
M A N AG E M E N T
Stock Market Update
December 8, 2013
Global Market Review: US SmallCaps +34.77% YTD,
Market moves higher despite US Government shut down and political uncertainty
By Don Freeman
U.S. Stocks Year to Date
S&P MidCap 400
Nov 29 Close
Stocks continue record run
Large-cap stocks extended their streak of gains last month, thanks to good economic news and some hopeful
signs for the holiday shopping season. You can see in the table above the strong gains year to date. The small
cap index (Russell 2000) taking the lead and up 35% YTD.
Last month, the Nasdaq Composite Index was the latest benchmark to cross a numerical threshold, breaching
the 4,000 mark for the first time since the days of the tech bubble in 1999-2000 (see chart below). The
composite remains about 1,000 points below its all-time high in March 2000, however. The large-cap indexes
and the small-cap Russell 2000 moved further into record territory, but the S&P MidCap 400 lagged somewhat.
Mid-cap stocks have given up their leadership lately, after having outperformed frequently in recent years.
Labor market continues improvement
Some signals suggested that consumers might be poised to provide a boost to economic growth and corporate
profits. Weekly jobless claims surprised many observers by declining by 10,000 to 316,000 on a seasonally
adjusted basis. The number of weekly layoffs has declined in six of the last seven weeks.
Good signs from Black Friday are encouraging
Early hints about the holiday shopping season from major retailers indicated that the better job market might be
encouraging consumers to spend. The Wall Street Journal reported that both Wal-Mart and Target were
enjoying strong sales both in stores and online. Consumer discretionary stocks have fared well lately.
The chart above shows the Japanese Nikkei Index breaking out of its sideways trading range. This is a bullish
sign for the overall global economy as Japan appears to be on a path of growth.
Google, Apple, the Thailand Exchange-Traded Fund and Facebook are shown below. Google, Apple and
Facebook are breaking upward through overhead resistance (a good sign) and Thailand appears to be putting in
a bottom formation.
Many people have recently sent me emails asking about China and when it will move higher. You can see
below the Exchange Traded Fund (FXI) which tracks the Chinese market. Since 2010 it has not moved above
$45 a share. The chart looks well rested and ready to advance once again. I will be watching this chart in the
next few weeks to see if it can break above $40 and begin to move higher. With the US and Japanese markets
heading higher I would expect China and other emerging markets to follow soon. Stay tuned.
Long Term Outlook:
Our asset allocation model continues to put us near the Relief / Optimism phase on the Cycle of Market
Emotions Curve, (see below graph) The low of the curve was established in March 2009 as the investment
world was in a period of despondency and depression. Clearly now after 5 years of low interest rates, the news
is better but we have yet to reach Euphoria. What this means is the bull market is still young in its infancy and
has much more room to grow in the next 12 to 36 months. My asset model continues to signal the bull market
has run about 50% from the 2009 lows and has strong gains to come in the Excitement, Thrill and Euphoria
Market uptrend to new highs continues strong: Bull market alive and well
Long term (12-36 months) purchases at current levels will likely be much higher as interests rates
remain low and stock valuation attractive.
The small investor has not yet returned to investing in stocks.
Do not fight the Fed: Monetary Liquidity positive for the bull market to continue
Leading stocks and funds breaking to new highs
Japan stock market breaking to new highs
Housing recovery taking hold as prices rise and Oil prices declining
Gold has recently cooled, the US tech sector producing leadership stocks, Dow Transports at new highs,
interest rates low, 13 year US market consolidation behind us.
Perfect conditions for a strong upward bull market in growth stocks.
My asset model continues to recommend buying growth stocks and funds on market weakness in this
upward trending market. There is tremendous cash sitting on the sidelines which will add more fuel to
the bull market once the public investor begins to return.
Thank you for reading.
Freeman Capital Management,LLC
P: USA (503) 616-3850 I Fax: (503) 914-1954 I Thailand : +66 (0)89 970-5795
Don Freeman is president of Freeman Capital Management, a Registered Investment Advisor with the US
Securities Exchange Commission (SEC), based in Phuket, Thailand and the United States. He has over 15 years
experience and provides personal financial planning and wealth management to expatriates. Specializing in UK
and US pension transfers. Call 089-970-5795 or email: email@example.com.