How is it that we constantly end up here – It’s Monday again. This Monday, today, starts a shortened week, but so what? It is still Monday, the beginning of the week, the end to the weekend, the time when the market slips away from my thinking, sort of.
I try to avoid thinking about it, but my email brings me global news on the weekend and folks always ask me – what do you think the market will do? My answer is a fairly loose one, and that is the market has plenty of space to move up over the long term, but, on Monday, I have not a clue. So, here we are and what is the market doing?
- ‘Common sense’ says look out for a market drop.
It looks flat to me, after opening with some power to the downside. The VIX is in the green, oh, just about 1.8%, which suggests some folks are thinking some downside is coming in the next thirty days. Then again, the VIX is only in the mid-11s, a bit lower than the zone I would like to see, which is the mid-12 zone, maybe 13 even. The market needs a little bit more wariness because, despite the long term upside potential, there is still the issue of a market pushing higher at the end of an earnings season, an earnings season that did fine, but still left the S&P 500 with a P/E at the high end. This suggests and overvalued market, which could rebalance at any time.
Yes, I am getting a feeling the market is looking to correct a bit. When, I don’t know, but the time is coming. Perhaps Iraq will catalyze the movement. The problem, of course, is what to do? Do I risk getting in just to see my trades drop, thus, tying up my money? BTW, the market is now in the green and the VIX is retreating.
- It’s a compelling argument but common sense has kept plenty of people out of the stock market entirely since 2009.
This type of thinking has kept many a folk out of the market since 2009, but those are the true believers, the folks who buy into the doom and gloom, the end of the word as we know it preaching. What I am talking about is a vacation, one that I take from time to time, a respite from the market, a chance to watch the market and assess.
- At least thus far every head fake and dip has been a buying opportunity. Those betting otherwise have been taken out in a box.
And there it is. If one thing is true (and many more than one are), it is that the market will dip on its way to ever higher grounds. Since this is true, my little “vacation” simply means I wait for the opportunity to buy on the dip.
- Global investors put more money into stocks in June favoring the United States and Britain where economic recovery is gathering pace over other developed markets, a Reuters poll showed on Monday.
Now, if we get some time down the road, say into the next earnings season, and the market is still without a meaningful rebalancing, then either the earnings are fantastic or the market is simply bent on going higher through the fall, which it has done every fall since 2009.
- Investor support for large acquisitions and a desire to trump rivals in consolidating markets have led chief executives to strike big transactions so far in 2014, raising year-to-date global deal volumes to their highest level in seven years.
But I am getting ahead of myself with all this futuristic talk. It is Monday, after all, and even now, after watching the market for an hour or so, I still don’t have a clue as to what it will do today. What I do know, or at least I am fairly certain of it, is that conditions are building in favor of the “long-in-the-tooth” bull market continuing for some time.
- New York’s cities and towns can block hydraulic fracturing within their borders, the state’s highest court ruled, dealing a blow to an industry awaiting Governor Andrew Cuomo’s decision on whether to uphold a six-year-old statewide moratorium.
The above is interesting, as it adds more impetus to a growing movement against fracking, which suggests headwinds for the industry and tailwinds for other forms of energy, such as solar and wind. You see, if other states follow New York’s lead here, there is trouble on the horizon for natural gas. I mean, it is not as if the extractors of natural gas can simply say, fine, we will go somewhere else to do our thing. Nope, you gotta go where the gas is and if folks don’t want you there …
Trade in the day; invest in your life …
