Federal Reserve chief Janet Yellen has turned dovish in what is probably her last report to the US Congress before her term ends in February. With inflation still below target and the Fed's balance sheet set to shrink within the year, the pace of US interest rate hike will be slower. This will create a favorable environment for stocks as the US economy recovers while rates remain low.
The Dow hit 21,580, another record high, at one stage before closing at 21,532 on Wednesday. The index has posted a cumulative gain of 230 percent from a low of 6,516 on March 9, 2009. The Nasdaq rose 1 percent to 6,261. From a low of 1,265 on March 9, 2009, the Nasdaq's cumulative gain was 394 percent.
The Hang Seng Index yesterday surged 302 points to 26,346. Its cumulative gain was only 146 percent from a low of 10,676 on October 27, 2008. The HSI reached a historical high of 30,922 on November 2, 2007. In the past 10 years, the peak was at 28,588 on April 27, 2015.
Analysts have now turned mostly positive. Dr Check sees resistance at its strongest at 27,500 points. Investors should enjoy the "goldilocks" period and pile up more profit. Technology, China bank, insurance and international bank stocks should be kept.
Dr Check and/or The Standard bear no responsibility for any decision made based on this column.