As days go in the market, or, I should say, as days have gone recently in the market, today is one of the more interesting.  

  • U.S. stocks edged lower at the open on Thursday as traders awaited developments in Syria, and as stronger-than-expected U.S. economic data lent weight to the possibility of a wind-down soon in the Federal Reserve’s stimulus program.

Right out of the gate, stocks dropped. Sellers had their way for a moment and the media pronounced the reasons. Interestingly, Syria popped up as a reason for the market drop on the opening, but of more interest is the pronouncement the drop came because the market is worried stronger economic data means the Fed will deliver on QE tapering in September. Translated, the breathless media is telling us the market cares more about central banks taking excessive liquidity out of the market than it does about stronger economic data.  

  • U.S. gross domestic product grew at a 2.5 percent annual rate in the April-June period, according to revised estimates released by the Commerce Department. That was more than double the pace clocked in the prior three months.

Given that the market actually has turned around (keep Syria in mind), it appears to me the breathless media just might have it wrong on this one (really?). If the market cares more about QE tapering than it does corporate profit, than why isn’t the market tanking this morning? After all, traders take profit when they are afraid, right? Could it be that some of the smarter folks on the block are getting in while the getting is good?

It is also interesting that with all the blather about the Syria and the sky falling, the VIX, commonly known as the fear gauge, still sits right around 16, a point many would consider just about right. The VIX shot up on Tuesday on the news about Syria, but today, it is sitting still, more or less.

  • In the second quarter, higher taxes appeared to hold consumers back. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, slowed to a 1.8 percent growth pace after rising at a 2.3 percent rate in the first quarter.

The economic world is not perfect out there, but as I have been writing, it is better than the breathless media portrays. True, the sequester and higher taxes have taken a small bite out of the consumer, but, again, as I have been writing, it might be that the low-end jewelry at Tiffany’s and the plastic thing-a-ma-bobs one gets at Walmart are not selling at a huge clip, but folks are buying big items, such as cars and houses.

  • In the second quarter, investments in housing accounted for nearly a fifth of the economy’s growth during the period.
  • A joint forecast from J.D. Power and Associates and LMC Automotive sees a selling pace of 16M units in August which would mark the first time since sales reached that level since 2007.

Stay with the plan. Keep your eye on Syria, but don’t panic. Take some cash and get into the market now, and then get some in later after we find out what will happen in the Middle East and after the whole business with the debt ceiling passes. Don’t forget, in the end, the market cares more about corporate profit than it does just about anything else, including QE tapering in September.

Trade in the day; Invest in your life …

Trader Ed