Market Overview

How Best To Play The Relief Rally In The Stock Market


According to an article on CNBC, despite yesterday’s big rally, investors are a bit wary of the current investment scenario. It is difficult to say whether the market has returned to its form or the last week’s downturn will further bear on the bourses. The following are the four best means through which investors can capitalize on Monday’s bull market rally.

Avoid Europe: Investors are advised to avoid European stocks and give preference to US stocks instead. Market strategist at National Securities in New York, Mr. Jordan Kimmel says, "Europe is stable as an economy but I don't find a lot of opportunities among European companies. Not a lot show up in my models of fastest-growing healthy companies. You're finding them in America, finding them in Latin America, finding them in China. Europe is stable but not a growth environment."

Stay With Quality: Investors are recommended to buy only the ‘best-of-show companies,’ such as General Electric (NYSE: GE) and the agriculture manufacturer and distributor AGCO (NASDAQ: AGCO).

Cash is Good: In an environment where The Chicago Board Options Exchange's Volatility Index had slipped over 30% at one point, investors are advised to simply wait for the time being till the market gains more stable grounds. David Twibell, the president of wealth management for Colorado Capital Bank in Denver, says, “I would use this as an opportunity to raise cash as a risk-management tool. We wouldn't necessarily raise a tremendous amount of cash, maybe 10 or 15 percent. That would give you a little cushion and a little powder to deploy."

Find Some Undervalued Stocks: Standard Motor Products (NYSE: SMP), Philip Morris (NYSE: PM), CONSOL Energy (NYSE: CNX), Credit Suisse (NYSE: CS), Cytokinetics (NASDAQ: CYTK), Continental Airlines (NYSE: CAL), KongZhong (NASDAQ: KONG), POSCO, MetroPCS (NYSE: PCS) and Dynegy (NYSE: DYN) are some of the stocks picked by Sam Stovall, S&P's chief investment strategist from each of the 10 S&P sectors. These stocks have the greatest distance from their closing price on Friday and their projected 12-month price target.

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