This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Market Preview: Just Plain Risky

Updated from 6:44 p.m. ET to include additional information about Tuesday's economic data.

NEW YORK ( TheStreet) -- One odd little factoid about the broad market's rally off the October lows is that earnings expectations for the first quarter were falling steadily throughout.

Now that reporting season is finally here, the opposite scenario is playing out. The results so far are comparatively good with roughly 80% of the companies opening their books coming in ahead of consensus, yet stocks have finally begun to pull back.

Since the start of the calendar second quarter, the Dow Jones Industrial Average has lost 2.2%, the S&P 500 has given back 2.9%, and the Nasdaq has surrendered 3.9% through Monday's ugly start to the week.

The market's direction usually gets explained away on a day-to-day basis by pointing to a hodgepodge of factors; many times boiling down to bad headlines -- Europe's political instability, China's economy showing signs of cooling off, Wal-Mart's (WMT) Mexico fiasco -- putting the so-called risk-off trade into effect, or else the opposite, good headlines being cited as giving traders the confidence to ramp up risk.

BMO Capital Markets addressed this schizophrenic view of the markets on Monday as the firm established a year-end price target of 1425 for the S&P 500.

"[I]t appears investors are basing investment decisions more on emotion rather than analysis lately," wrote chief investment strategist Brian Belski, who joined BMO from Oppenheimer earlier this month. "For instance, recent market trends have become increasingly bifurcated, alternating between 'risk-on' and 'risk-off' sentiment, which in turn has been fueled by investor fears of either 1) missing out on periods of market strength or 2) preserving capital during periods of market weakness."

Belski is bullish but believes trying to play along with this "risk-on, risk-off" psychology is a losing game. His optimism stems from a belief that the United States is set up to act as a safe haven of sorts over the next few years as Europe struggles and China works through its growing pains.

"[W]e firmly believe US fundamentals are positioned to provide global leadership for the next several years and as a result, those investors who maintain a disciplined and process-oriented approach to fundamental analysis during periods of potential volatility will most likely be the ones who benefit the most," he wrote, advocating "active" stock picking strategies over aping indexes.
1 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.99 0.00%
NFLX $87.40 0.00%
SPY $186.63 0.00%
FB $102.01 0.00%
GOOG $682.40 0.00%


Chart of I:DJI
DOW 15,973.84 +313.66 2.00%
S&P 500 1,864.78 +35.70 1.95%
NASDAQ 4,337.5120 +70.6750 1.66%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs