Market Recap - Now What?

The only news that really mattered today was the Fiscal Cliff deal that sent stocks higher on the first trading day of the year. (More on the Fiscal Cliff deal in a previous blog post.)

A late day surge in equities put the US stock indices near the best levels of the day when the closing bell rang. The S&P 500 closed up 2.5% at 1462, only a few points away from a new 5-year high. The small-cap index, the Russell 2000, shot up 2.8% and closed at the best level ever!

Small-Caps Lead - Leading the way in the Russell 2000 were:

• Zipcar ($ZIP) - Company being bought by Avis Budget Group ($CAR) for a huge premium and the stock rallied 48%.
• Carriage Services ($CSV) - The morbid operator of death-based services hit a new multi-year high today with a gain of 13%.
• Marlin Business Services ($MRLN) - The commercial equipment financing company rallied 10% and is closing in on a new all-time high.

Best Performing Country ETFs - The SPDR S&P 500 ETF ($SPY) that tracks the US market was up 2.5%, but a handful of other countries did even better on the first day of trading in 2013.

• Market Vectors Vietnam ETF ($VNM) - rallied 5.3% and closed at a multi-month high as money found its way into the "risky" country.
• Global X FTSE Argentina ETF ($ARGT) - another risky and underperforming country is Argentina and today saw a bounce of 4.3%.
• Market Vectors Egypt ETF ($EGPT) - the rollercoaster ride that is Egypt followed the path of the first two countries with an oversold bounce of 3.8%.
• iShares Mexico ETF ($EWW) - even thought Mexico did not keep up with the US today, the country's ETF closed at the best level ever after rallying 1.8%!

Now What? - Time to sell or is it time to ride this wave of buying? That was the number one question I received today from individual investors. My gut reaction to hold for the rest of this week as I believe there will be continued buying into the weekend. At that point I will have a couple days to analyze the charts and some individual stocks/ETFs to make a better determination of the next move in the market. I continue to feel new all-time highs will be set on the major US stock indices and therefore the bias will remain bullish. The only difference could be some selling of lagging positions into the recent rally to free up cash for new and better opportunities. Stay tuned.