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
TheStreet Open House

4 Reasons Not to Buy Stocks in 2013

BALTIMORE ( Stockpickr) -- I'm bullish right now. In fact, I've made it no secret that I'm very bullish on U.S. stocks, and I have been for a while now.

>>5 Stocks Ready to Break Out

Thing is, since calling the end of the market correction in late June, I've been right too. As I write, Mr. Market is up around 20% from that mid-summer low in the S&P 500. But I'm not writing this column today to pat myself on the back.

I'm writing it because what if I'm wrong from here?

As an investor, when you're right for too long, it's critical to question your investment thesis. After all, as market legend Ned Davis is fond of saying, "There's a difference between being right and making money." That's why today I'm going to play the devil's advocate and take a look at four reasons not to buy stocks in 2013.

(If you missed the original " 4 Reasons to Buy Stocks in 2013," read it now. )

1. The Market's Internals Are Weak

One of the biggest criticisms that's been floating around of late has been the concern that market internals are weak -- but quite frankly, that's a cop-out. Saying that "internals are weak" is an easy way of sounding smart without actually needing to back it up with actual metrics. (Ironically, a Google search of the phrase "weak market internals" mostly brings up results from mid-2009. We all know how that played out.)

>>5 Trades Getting Ready to Pop

Digging into market breadth indicators such as the advance-decline line, it's clear that market internals are actually confirming the new high-water marks being put in by the S&P right now.

The climbing A/D line means that most stocks are participating in the rally -- it's not merely being led by a few mega-cap leaders. That's a sign of market strength.

I think a more convincing red flag comes from Wall Street strategists right now; more and more equity folks at big banks are finally turning bullish, a signal that the contrarian extremes in hatred for the market are starting to unwind. That's not a good thing for stocks necessarily, however. When everyone gets bullish on stocks, it's historically a sign that the rally has run its course.

1 of 4

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,172.68 -107.06 -0.62%
S&P 500 1,994.29 -16.11 -0.80%
NASDAQ 4,527.6890 -52.10 -1.14%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs