Fed, Jobs and Hope Take Center Stage
The headlines are buzzing with the Buffet acquisition and it would lead you to think the market was up big yesterday. The big winner was commodities as the dollar gave up early gains to spark some interest. The broad markets were basically flat and most are waiting for the results of the FOMC meeting today.
It is important to understand the time-frame for investing has contracted based on the last two weeks of trading. Trendlines have been broken, support lines broken and tested, economic data disappointed and revenue data from earnings not impressive. All of this and more is sapping the confidence from investors looking forward. When time horizons contract the trading volume increases along with volatility. I state all this to put in perspective some of the short term focus from both myself and investors.
I would love to be long term investors, but the market conditions remain suspect and thus, I remain cautious. I am optimistic, but cautious. Now is when we have to take a deep breath, look for the opportunities where we can find them and be patient.
The news from the FOMC is not likely to be too different from what we have seen of late. The language is expected to adjust, but the liquidity will most likely remain accommodating. I am not big on guessing or gambling on the outcome of news. There may be a science behind gambling, but it is still gambling. Let the data flow and then make the appropriate decisions based on the outcome. Whatever excitement comes from the news will be short lived as all eyes will shift to the Friday jobs report. Stay focused on your portfolio and decisions. Maintain your discipline and manage your money accordingly.
I am looking for the dollar to be less of an impact on the markets by stabilizing near the 76 mark or moving and retest the current lows. This would help the dollar related commodities with a push back to the recent highs. Watch for industrials and basic materials to benefit from this near term. The recent pullback in the broad market has created a trading opportunity. Make sure to review both the Scan List and Watch List on what we are looking at both short and intermediate term.
Economic data continues to flow with factory orders positive yesterday. The ISM manufacturing data was positive and ISM Services come out today. The ADP jobs report will give a glimpse into the Friday report and of course the FOMC meeting. One surprise yesterday came from the auto sector with better sales data after the clunker promotion. Ford posted a profit in earnings for the first time in two years. Throw in the Buffet train set acquisition and you have things sounding positive.
I am not willing to bet the farm yet on the outlook, but they remain on the upswing and like anything you have the glass half-full and the glass half-empty. Thus, have a portfolio of the half-full and filter for others to finish filling the glass. It is easy to get short-sighted in markets like this, but stay focused on the horizon as opportunities are building and money fights to find a home.
Precious metals, base metals, energy, industrials, basic materials and other sectors have been reestablishing their leadership. The question is will they exert enough for the market to take the next leg higher or is it just a last gasp bounce before retesting key support on the major indexes. Be patient and most importantly be disciplined towards investing your money.
Have a great day investing!
