U.S. stocks and gold to drive higher «
U.S. stocks and gold are leading the way. In fact, these are our top picks for the months ahead and they’re looking good. Here’s why …
— Gold has been a consistent winner year after year. The technicals are bullish and so are the fundamentals. Gold’s bull market rise will remain intact by staying above $1560.
Due to monetary uncertainties and massive debt, central banks are big gold buyers. And so is the public, especially in China, India and other emerging nations. This is keeping demand strong.
Ongoing government spending, monetization, low interest rates in the Western world and weak currencies are also putting upward pressure on gold and silver.
These are the basic reasons why gold will continue to head higher, and it’s why we like SPDR Gold Shares /quotes/zigman/41663/delayed/quotes/nls/gld GLD -0.06% and iShares Silver Trust /quotes/zigman/417006/delayed/quotes/nls/slv SLV +0.21% .
— Stocks have been moving up on improving economic news, as well as the fact the Fed stands ready to jump in again, if needed, to help boost the economy.
Europe has also calmed down somewhat and taken together, these two factors have led to a sense of calm and some optimism. That is, investors have chosen to focus on the good news for now, even though the fundamental reality has not changed.
As you know, sentiment drives the markets, not necessarily reality. As investors, our reality has to be accepting the current sentiment. In other words, we have to let the markets tell us what to do, not the other way around.
Currently, the Dow Industrials /quotes/zigman/627449/realtime DJIA +0.25% are bullish by holding above 11950 and it could rise up to near the 14000 level. Yes, there will likely be volatility and downward corrections along the way. So you also need to be selective and caution is warranted.
That being the case, we’d go with some of the stronger stocks/ETFs like NASDAQ 100 /quotes/zigman/105934/delayed/quotes/nls/qqq QQQ -0.03% and Dow Diamonds /quotes/zigman/588977/delayed/quotes/nls/dia DIA -0.02% , and ideally buy on weakness. Considering the overall foundation, we’d also keep trailing stops on most positions.
Even though Europe has settled down a bit, it could again trigger more volatility and downward pressure on many of the markets. Again, you want to be prepared for whatever comes and by all indications, what’s happening in Europe will continue to be a dominating factor.