Thoughts to Ponder
Is there a follow up to yesterday’s surge higher? The move higher yesterday came at the expense of the dollar. However, we have to give the housing news some credit as existing home sales moved up more than 10% in October. What do we do for an encore? Have some Turkey and wait for next week?
The trading volume this week will be light and the answers to how investors trade looking forward won’t get answered until next week. All eyes will be on the consumer and how much money they spend at the malls over the weekend. The tone will be set by this action into year end. The trading volume has been on the light side and I don’t really expect that to change very much for the balance of the year. You can already see the posturing for 2010. What sectors will do well and economist assuring everyone it will be a good year for stocks. I enjoy reading the comments, but the bottom line is still the economy and projected growth. Thus far we have not produced the growth to support the current price levels and without some changes in the first and second quarter it will be hard to achieve some of the estimates.
The correction process is never easy and bull markets don’t die a simple death. This is why keeping your focus is essential. Follow the trend, take what the market gives and protect the downside risk. That is as simple as it gets. Like most investors, it is easy to get caught up in trying to figure out the prefect system or strategy for investing. The challenge, the market is made up of investors just like you and I. Everyone has the answer on how to make money. Yet, there is only one thing I have learned for certain about the market, the best way to make money is by not losing money.
Thoughts to ponder looking forward:
1) Bernanke states he is committed to a strong dollar. Yet, Fed Presidents stated yesterday it could be fall of 2010 or 2011 before the Fed takes the current zero interest stimulus away. Watch the dollar get crushed if that is the case. See the dollars response yesterday for indication.
2) China’s oil consumption rose for the second month and there is reason to believe it will continue near term. Watch oil prices as a result. If U.S. demand just stabilizes, this could impact the demand picture and oil would push towards the $100 mark.
3) Home sales pushed higher and inventories lower. This is a positive for the U.S. economy. The tax credits get the ‘credit’ so to speak. What happens when it is removed? False stimulus or buyers back to stay? Key component of the U.S. economy.
4) Gold is at $1165. I don’t know exactly how high you have to go until the air is so thin you prompt a nose bleed, but we are approaching those levels. Look for pullback on the price of gold and another opportunity to buy as it settles down.
5) Resistance is in play for the broad markets. If we make it through resistance before year end look for a strong finish to an interesting year. If we fail to break higher, stops would be a good idea.
There are ideas and opportunities, but they are limited, as a result, everyone seems to be piling into the same trades. Gold is just the latest example. Be cautious this is how investors get burned and lose money. There are perfectly good times to sit on the sidelines and observe, now maybe one of those times.
Have a great day investing.
Tip of the Day: Cash is a sector of the broad market.
