This Day On The Street
Continue to site
ADVERTISEMENT
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

Final Hour: Risk Bellwethers Chime Clearly

NEW YORK (TheStreet) -- There was a clear equation for Tuesday's gains: better economic data equals healthy stock gains and a new record for the S&P.

Bellwethers for solid risk appetite were ringing loudly: small caps gaining more than a percent, biotechs rebounding, financial stocks outperforming and safe-haven gold slumping as the worst-performing sector in the S&P.

It's a pattern investors are hoping will repeat through the warmer months, after the sluggish sideways slide since January. Now that we've digested those rich valuations and fast momentum rally, it's time to keep inching higher on better data and earnings.

Not that risks are absent: check out that near 14-month low in the VIX. While a low volatility reading is generally positive, slipping to such low levels smacks of complacency over geopolitical risks -- aka Ukraine, bets over ECB stimulus, Chinese or Japanese growth and the raft of European elections.

ECB's Mario Draghi has again signaled readiness to act on low inflation and Chinese authorities have said they may adjust economic policy. While Draghi has previously talked up markets without acting, pulling that stunt twice is risky and investors are almost salivating at the thought of more stimulus in early June. Not that we expect any drastic upswing in the U.S. -- we've already had our stimulus run.

Another reason for caution: S&P 500 call options, which enable investors to buy the index at a future time, are at their cheapest level in a year, according to Credit Suisse. That means investors see scant upside for the market.

As long as data continues to improve, we'll move forward in fits and starts. Still, inching to new highs for the S&P feels somewhat anticlimactic.

-- By Jane Searle in New York 

>>Read More: 

Pilgrim's Pride Bids $6.4B for Hillshire 

Bank of America Tries to Bounce Back From $4B Capital Blunder

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
Submit an article to us!
SYM TRADE IT LAST %CHG
AAPL $128.95 0.00%
FB $78.99 0.00%
GOOG $537.90 0.00%
TSLA $226.03 0.00%
YHOO $42.51 0.00%

Markets

DOW 18,024.06 +183.54 1.03%
S&P 500 2,108.29 +22.78 1.09%
NASDAQ 5,005.3910 +63.9670 1.29%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs