It should be clear to all at this point that the market has, for now, shaken off any concerns about the Fed and tapering. True, when the Fed begins sending its signals again, the market will have a noticeable negative response, but it will be relatively mild and not long-lived, much like what we just witnessed last week.

I wrote the words above on Monday, right after the positive employment report came out on Friday and the market jumped up. Yesterday and today, we are seeing a market wanting to sell off. Although, we have no explicit signals from the Fed that tapering will begin in December, we do have a sign from Paul Ryan, no less, the US government can function normally.

  • House and Senate negotiators have reached a budget agreement that sets spending levels for the next two years and replaces some of the automatic budget cuts in the sequester. If the full House and Senate back the proposals, which include modest spending reductions, a government shutdown next month will be averted.

We also have more positive economic data that supports the ongoing trend in the global economy – forward movement.

  • As expected, Japanese machinery orders rose 0.6% in October after falling 2.1% in September. The figures should ease concerns that the fledgling recovery in business … (investment) has already come to an end. The trend points to a renewed rise in capital spending in Q4.
  • As expected, German CPI rose 0.2% on month in November following a drop of 0.3% in October.

I said it last week, earlier this week, and I say it again now, the market is correcting a bit, which presents a buying opportunity.  The big dog money is watching and waiting and picking off bits here and bits there. One way I know this is my trading portfolio. Even though the market overall has been down with a push for two days, my volatile stocks are steady, and my steady stocks are advancing in the face of the “sell off.”

If you are among those who believe the market is headed for a major correction, and you are one of those who believe that only then will there be an opportunity to “get in,” then consider the following from State of the Markets web site.

  • The fast-money types almost universally believe that the stock market is mean-reverting animal. Trends don’t last and prices will always pull back to some special level that only they can see. “The smart money waits for a pullback to take a position” seems to be the battle cry among this crowd. How many times have you seen the geniuses on T.V. say, “We can’t buy that here; wait for prices to come in.”

What I am saying, which differs from the above, is don’t wait for the major correction. Take the “tapering” corrections we are getting now. Get in and get out, if that is what does it for you, or get in and wait for a while and then get out, if that does it for you, or, do both, as I am doing. In any case, get in because the overall trend will not change for some time. Taking the government budget impasse out of the equation just about seals the deal for that. True, raising the debt ceiling is coming again February, but that is February. In the meantime, do your thing; don’t wait for a major correction.

Now, let me leave you with a thought provoking and, hopefully, stimulating bit of information.

  • A group of over 20 tech companies including LG, Panasonic, Qualcomm, HTC, and Sharp has joined forces with the Linux Foundation in hopes of spurring the development of Internet-connected devices that work together regardless of their manufacturer. The Linux Foundation, a nonprofit that supports the spread of the open-source Linux operating system, announced the creation of the nonprofit AllSeen Alliance on Tuesday.
  • Over the last several years, interest in connecting normally offline devices like toasters, door locks, and cars to the Internet in order to augment their functionality—a trend known as the Internet of Things—has grown sharply. Data from ABI Research estimates that there are already more than 10 billion wirelessly connected devices in use, and by 2020 there will be more than 30 billion.

Over 10 billion wireless devices already and many more to come. Yup, think wireless, which means think smart devices, and then look for opportunity there.

Trade in the day; Invest in your life …

Trader Ed