This weekend, the latest bugaboo for the market arrived. The Republican head of the Budget Committee for the House announced on “Meet the Press” that he thought the sequester cuts to the US budget would happen. If it ain’t this, it is that. I doubt this rhetorical nonsense has had any influence on the market today, but as March 1 gets closer that might well change, although me thinks the investor world is much less prone to these injections of fear after so many years of the breathless media and politicians peddling fear.

  • Investors are less predisposed to an “outlier or fat-tail scenario” that involves the U.S. either defaulting on its debt, China slowing down sharply or Europe collapsing under the weight of its debt crisis.

As I write, the DIJA and S&P 500 are flirting with green after opening and holding in the red and the so-called “fear gauge,” the VIX, is up a bit, but is hanging around the mid-13 range, which is off its recent lows in the mid-12 area. I suspect the market is less fearful of Washington and more concerned with good and just a bit less-than-good economic data juxtaposed against the steady melt up. The less-than-good below (housing news) is really not so bad, given it is winter and the political nonsense out of Washington.

  • A gauge of planned U.S. business spending [US durable goods orders] rose in December, a sign that business worries over tighter fiscal policy may not have held back investment plans as much as feared at the end of 2012. The government also revised higher its estimate for November. Overall, durable goods orders jumped 4.6 percent in December.
  • The index of contracts for the purchase of previously owned homes fell 4.3 percent to 101.7 after a revised 1.6 percent increase.

China is gathering steam and many believe Europe has hit bottom, so …

  • World shares dipped on Monday and oil prices steadied due to investors’ caution on whether the strength of the global economic recovery justifies the sharp rally so far this year.

Interestingly, the NASDQ opened in the green and has shown strength thus far today. I guess technology is in favored status today. Maybe it will remain so as we move down the road of economic recovery. I know I have my technology watch list going again (check out Corning), but before I switch gears, I want to finish playing with Ford and BofA. Both have hit resistance after trading higher, which makes both an opportunity. Below is an example why.

  • With downgrades from Barclays and Deutsche Bank, it looks as though Ford is ready to pullback. How far will the pullback bring shares, and will it be short-lived?

Ford earnings are due tomorrow. That report will either spur the stock forward or send it into reverse. Europe is a problem for the carmaker, which will affect earnings, but that will change as Europe steps into positive-growth territory. Either way, Ford is cheap, now …

  • Your posts mean great deal to me. I am a novice and just taking my first steps in trading. I find your posts in-depth, guiding, and there is something that just kinds of enlightens things inside my head.

TraderPlanet looks to educate all levels of traders/investors, so I try to keep my thoughts clear, illuminating, and simple. Thanks for the compliment.

Speaking of education about the market …

  • The FSA said Swift Trade engaged in “systematic and deliberate” trading practices known as “layering” – posting tens of thousands of orders on the London Stock Exchange from different parts of the world to dupe the UK market about true supply and demand for the shares. The resulting share price moves were exploited and the original orders deleted.

Never forget, the market playing field is far from level, but that reality does not mean one cannot make money in the market. Be smart, be careful, and if you do your work, it is less likely the bad folks will hurt you.

Trade in the day; Invest in your life …

Trader Ed