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Global Market Review 8 December 2013 Don Freeman Thailand


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Global Market Review: US SmallCaps +34.77% YTD,
Market moves higher despite US Government shut down and political uncertainty

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Global Market Review 8 December 2013 Don Freeman Thailand

  1. 1. FREEMAN 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 Index DJIA S&P 500 NASDAQ Composite S&P MidCap 400 Russell 2000 Nov 29 Close 16086.41 1805.81 4059.89 1306.85 1144.63 % Change Year-to-Date 22.76% 26.62% 34.46% 28.07% 34.77% 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.
  2. 2. 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.
  3. 3. 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
  4. 4. 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 phases. Summary: 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. Don Freeman Freeman Capital Management,LLC P: USA (503) 616-3850 I Fax: (503) 914-1954 I Thailand : +66 (0)89 970-5795 Skype: Don.freeman1 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: