Tax Increases Will Pop Market Rally: Trader
As the first quarter comes to a close, the Dow is barreling toward 11,000, fueled by low rates, earnings optimism and typical end-of-quarter buying. But one thing could pop the rally: Higher taxes. "I think you're probably going to see the highs for the year sometime in the second quarter or early third quarter — probably low to mid 1200s on the S&P," said David Rovelli, the managing director of equity trading at Canaccord Adams. "Then, people will come to the reality in the second half that a lot of adjustable-rate mortgages are resetting and taxes are going up on the rich," he said. "Our [U.S.] debt is going to be increasing and taxes will be raised year in and year out," Rovelli explained, referring to the recently signed health-care legislation, which is set to increase income and investment taxes in the next few years. So how do you trade the ascent? Rovelli said tech is blazing the trail — notably Apple . "As long as Apple goes higher, the Nasdaq goes higher," he said. And, he thinks semiconductors could see another leg up in the meantime. "Semiconductors usually have the incentive to lead the market higher — they're in everything," he said. Exhibit A: Qualcomm , which makes chips for cellphones and other gadgets, today raised its earnings and revenue forecast. Rovelli is looking at the Philadelphia Stock Exchange semiconductor index to see if it can hold for a few consecutive days above 370. Halftime Report: Pullback Or Profit Taking? A new all time high for a number of stocks couldn’t keep the S&P in the green on Tuesday. Is the action just end of quarter profit taking or are we heading for a pullback? Strategy Session with the Fast Money traders I think we’re seeing profit taking with investors perhaps looking for a bit of a pullback, says Pete Najarian. There’s no denying that volume is absolutely awful. As far as I can tell, investors are ready to close up the quarter right here. Moves lower in Citi and BofA look like profit taking, counsels Todd Gordon of Forex.com. But there is another stock that’s making me worry about a pullback. Goldman failed around 178 – that’s the 2010 high. I think that’s a cause for concern. And it's gone under the radar. I’m a little concerned about financials too, says Patty Edwards of Storehouse. However, I’m long Goldman but it’s for the long term. And broadly I’m neutral on the market. What must you know? Volume in the oil market is very light, says Addison Armstrong of Tradition Energy. I expect the oil market to be sleepy into the holiday. I think we see crude bounce around and test below $82. And despite a bullish outlook from Goldman about nat gas , I just see no reason for nat gas to rally, Armstrong adds. Hedge Fund Managers: CALL THE CLOSE Pete Najarian: I think people are ready to close up the quarter and finish it right here. Patty Edwards: I’m neutral on the market. Todd Gordon: I think we’re heading lower in the euro. Addison Armstrong: I think we see crude bounce around and test below $82. -- Source: http://www.InterMoney.org
