What a difference a month makes. Do you remember the latter half of January and the first two weeks of February? The world of the market has certainly changed as the latter half of February has proven to be much better than the first half for trading. If this market temperament keeps up, I might get lulled into thinking the good times are here forever. One way to negate this temptation is to say to myself, “I need the market to go down, so I can buy back in.”
Okay, maybe I am over dramatizing the market reality, but I am feeling good again today because the market gods are allowing me to do what I do – make money buying and selling stocks.
- The question of the day remains largely the same as it has been for the past four trading sessions: Will a modest breakout to new all-time highs mean that the rally that began on February 4 continue or become just another maddening “breakout fakeout?”
You see, I am not the only one thinking about the upside move of the last four trading sessions. The soft economic data mixed with the solid earnings has created a swirl of sentiment in the market, however, the bulls seems to be more inclined to take action. Janet Yellen, the new biggie of the Fed, is leading the market with positive words of continuity, and this is also helping the upside move. Even the lowering of the Q4 GDP is not dampening sentiment, at least not yet.
- Putting it all together, it looks like stocks are off and running again. I’m even more bullish now knowing that over the past twenty years, March and April have been the market’s best-performing months. It’s true! Since 1993, the S&P 500’s average March gain is 1.48%, while April’s average gain is 1.85% for the prior 20 years. That’s the best month of the year, on average, for the past two decades.
Maybe it is all about the charts and historical averages, as suggested above. Will March and April bring May flowers? It all depends on the economic data, Russia, and the Ukraine now that the earnings season is winding down. I am not so sure I won’t get my wish for a market pullback so I can buy some more.
- The Institute for Supply Management-Chicago Inc. said today its business barometer increased to 59.8 this month from 59.6 in January. The median forecast of 53 economists in a Bloomberg survey called for the index to fall to 56.4.
Then again, if the economic data does turn around as the weather improves in March and April, I might just have to go with the flow and add to my positions on the way up. Be flexible. Yup, that is my mantra, go with the flow is the idea.
- China’s central bank delivered two major surprises to investors this week: it engineered a sharp decline in the yuan against the dollar and at the same time relaxed its tight grip on money markets that had kept interest rates firm. In effect, the central bank was playing bad cop with speculators in the foreign exchange market to try to shake out one-way appreciation bets, while making nice with money market traders.
It wasn’t that far back that China’s policy on both the yuan and the money markets was not all that accommodating. Again, what a difference a month makes.
- Once the world’s biggest bitcoin exchange, Mt. Gox on Friday filed for bankruptcy protection, saying it may have lost nearly half a billion dollars worth of the virtual coins due to hacking into its faulty computer system.
I still find this Bitcoin story fascinating on so many levels. It reminds me of the influence of greed and fear in the world. Bitcoins, as well as other alternative currencies, arise because some fear apocalypse. They fear an economic crash, that the money currently in circulation will become meaningless. It is why some folks hoard gold, or at least gold on paper, as like oil, so few actually own the precious metal or the precious liquid, in hard form.
As to the greed, well, we still don’t know who started this latest fad, so we don’t know who is benefitting, other than those who bought low and sold at the highs, but we can assume someone is benefiting from the heist of a $500 million worth of digital formulas. It is weird to even write that. In any case, wasn’t just about a month ago Bitcoins were all the rage, and now some are talking about its demise. You got it – what a difference a month can make.
I am out the door with an interesting piece of information, a perfect a descriptor of both the fast moving world of technology these days and the essence of the global economic philosophy.
- Originally derided as a pricey niche product for geeks, tablet computers have become so common that supermarkets are now selling their own brands, pushing out low-cost rivals.
Trade in the day; Invest in your life …
