Is it over? Is it safe? Can I come out now? These are legitimate questions after the stampede of the last few days seems to have ended. I see green across the board this morning and the VIX is tempering. So what happened to alleviate the panic? Earnings are still mixed (nothing new about that). We have new-home sales falling, durable goods dropping, and the private sector expanding, which is another mixed bag to consider. So, why, then, is the market suddenly not freaking out anymore?
- Emerging markets steadied after three days of intense selling on Tuesday, as investors waited to see if Turkey, one of the epicenters of the rout, would hike interest rates to defend its battered lira.
Back in 2008, the panic did not subside because there was nothing for the market to latch onto. All the news was bad every day and most days it got worse. Truly, there was nothing mixed about it. In today’s market world, “bad” news comes and goes, but, proportionately, there is more good news than bad, so it is difficult for the breathless media to keep pounding away on a bad news theme, such as emerging markets are crashing.
Thus, when earnings from big players come out looking good, and the preliminary view of the services sector in January suggests this powerful aspect of the economy has risen, this trumps the unexpected “plunge” in durable goods orders and new-homes sales falling.
- Ford Motor Co on Tuesday posted a higher-than-expected quarterly profit as a strong performance in the No. 2 U.S. automaker’s core North American market offset losses in Europe and South America.
- Financial data firm Markit said its January “flash” or preliminary services sector gauge rose to a four-month high of 56.6 from 55.7 last month. A reading above 50 signals expansion in economic activity.
Okay, so I am not so sure about my reasoning for the market turnaround today. Maybe it is not as simple as what I suggest. Then again, maybe it is even simpler. Perhaps, the market turned around because the stampeding buffalo ran out of running room. Maybe, the runners in the middle and the back of the herd got a clue as the runners in the front went off the cliff. Maybe they said, “Whoa, dude! This is not cool!” Maybe those with just a bit more sense asked the most logical of questions. “What exactly is it that is scaring us?”
- Honda has put more than $2.7 billion into expanding its North American auto plants in the past three years.
- Global smartphone shipments topped 1 billion units for first time in 2013, climbing 38.4 percent from the previous year to 1.004 billion units, research firm IDC said.
You see, when you just stop following the herd, stop running and ask some logical questions, you come to understand that running in fear when nothing is chasing you is, well, uncool. Let the herd feed on its own fear, while you pull off to the side and breathe deep. Wait until the herd gets it and then as it turns away from the cliff, you can claim a decent place in front of the ambling mass heading back to the green grass of the open plain.
Trade in the day; Invest in your life …
