Two Ways: Unused Cash Fuels Rally
Strengthen your portfolio in good times and bad.
Even after a 54% rise in the S&P 500 since March 9, there's still tons of cash on the sidelines.
According to a Bloomberg article, Americans are holding $3.5 trillion in cash. This equates to 73% of the S&P 500 companies' net assets; at the peak of the market in 2007 this number was at 62%. Another measure of money reserves, which includes cash, bank deposits, and money market funds, has climbed to $9.55 trillion. This is enough to buy every company in the S&P 500 because the combined market value of the index is $9.22 trillion.
With all this cash on the sidelines and interest rates near zero, risky assets are attractive once again. It's no wonder this rally won't quit.
From the Bull Pen: Google (GOOG) has been getting a lot of love from analysts -- most recently Barclay's raised its price target to $575. The stock has now pulled back for three days and those bullish could look to initiate a long position here with a tight 3% stop loss.
From the Bear Cave: Bears have had their time in the sun as the S&P 500 has now pulled back for three straight days. Those who are still bearish could attempt to short the market by going long the Proshares Short S&P 500 (SH) with a stop loss at $55.
A Quick Check Around the World
Asian trading closed with the Nikkei -2.50%, India (Closed), Hang Seng -2.07%, Shanghai -2.65%, and Taiwan -0.83%.
Across the pond, we see the FTSE -0.15%, CAC -0.25%, DAX 0.69%, Swiss Market -0.88%, ATX -0.16%, and Stockholm 0.04%.
Over in commodities, crude oil is trading down -0.32 to 65.70 while gold is up 0.70 to 992.30 this morning.
A quick check of the EUR/USD -.0059 to 1.4635 and the USD/JPY -.15 to 89.42.
On The Radar
01:00 3- Month Bill Auction
01:00 6-Month Bill Auction
Have a great day!
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