Market Comment

12/26/2011


Helped by stronger-than-expected readings on the U.S. economy, the Dow Industrials and Dow Transports have bounced within 1.5% of the closing highs reached in October. The S&P 500 Index has moved within 4% of its October high of 1,285.09.

With closes above 12,231.11 in the Industrials and 5,025.09 in the Transports, the primary trend would be regarded as bullish under the Dow Theory — and our Internet and telephone hotlines will be updated with specific instructions.

Our current plan is to reduce our bond-fund position to about 15% immediately with a bull-market signal, down from the current 21% to 22%. After that, depending on market action and the opportunities available in individual stocks, we are likely to boost our stock-market exposure gradually. For new buying, especially timely picks include AutoZone ($325; AZO) and MasterCard ($374; MA).


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