| NEW YORK
NEW YORK May 17 With the broad S&P 500 Index
gliding once again into uncharted territory and posting
four straight weeks of gains, the talk of Wall Street's rally
inevitably hitting a ceiling is starting to get old.
Concerns about a technical correction have been a hot topic
for weeks, especially as the rally accelerated in May - the S&P
500 is up 4.4 percent so far this month and up nearly 17 percent
for the year. But as the three major U.S. stock indexes inch
higher and higher to set record after record, many analysts are
shrugging off the pullback worries.
"There isn't a technical level that we have in mind at this
point when making decisions. The momentum is really strong, and
riding along that momentum is what we should have in mind at
this point," said Cam Albright, director of asset allocation at
Wilmington Trust Investment Advisors in Wilmington, Delaware.
The S&P 500, which rose above the 1,600 level only about two
weeks ago, is now less than 40 points away from 1,700.
As the market continues its upward move, some market
participants are beginning to believe that the rally is not a
bubble but rather the start of a new bull market. Others argue,
meanwhile, that the strong momentum is not based on fundamentals
like economic data or corporate earnings but is relying heavily
on easy monetary policy from global central banks.
Regardless, the consensus in the short term is that the
market will avoid two of Wall Street's most popular maxims -
"sell in May and go away" and "summer doldrums" - and maintain
the upward momentum.
With earnings season coming to a close, next week's focus
will be on the U.S. Federal Reserve. Chairman Ben Bernanke will
head up to Capitol Hill on Wednesday morning to testify on the
economy before the Joint Economic Committee. The minutes from
the Federal Open Market Committee's most recent policymaking
meeting on April 30-May 1 will be released on Wednesday
Preparations for the Memorial Day holiday on May 27 will
probably cut trading short, and most market action is likely to
be completed by mid-week. Lighter trading volume may also
trigger slightly higher market volatility.
FEAR NO MORE
Along with the S&P 500, the Dow Jones industrial average
has been setting a string of record highs. The Dow has
gained 17.2 percent for the year. The Nasdaq Composite Index
is up 15.9 percent for 2013 so far. On Friday, the
Nasdaq closed at its highest level since October 2000.
Even at these levels, a popular options gauge shows
investors are placing optimistic wagers on the stock market,
positioning for the current run-up to extend for the next three
Earlier this week, the Credit Suisse Fear Barometer, known
as the CSFB Index, fell 11.4 points over the past two weeks -
the largest decline on record - and is now at a one-year low of
The indicator essentially tracks investors' willingness to
pay for downside protection with zero-premium collar trades that
expire in three months, using S&P 500 index options.
"It's unusual to see at these levels that there are very few
indications (based on options activity) that investors are
expecting a pullback," said Randy Frederick, managing director
of active trading and derivatives at Charles Schwab in Austin,
The CBOE Volatility Index, or VIX, Wall Street's fear
gauge, is down more than 1 percent for the week.
The options market is a popular place for investors to hedge
against a sudden fall in the stock market. Among the most
popular strategies are put options on the S&P 500 index, and
call options on the VIX, which generally moves inversely to the
"Even if we see 1 (percent) to 2 percent decline, that will
be just another opportunity for people to get into the market,"
Next week's economic indicators include existing home sales
for April on Wednesday, followed by weekly jobless claims and
new home sales for April on Thursday, and durable goods orders
for April on Friday.
In earnings, a number of retailers' results are expected
next week, including Home Depot, Best Buy Co and
(Wall St Week Ahead runs every Friday. Questions or comments
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