Maybe I woke up with the angel of optimism whispering in my ear, but the news this morning, or at least a piece of the news this morning, has me feeling as if reality is settling in, at least on the geopolitical front.
- The Russian president’s assertion that he has withdrawn forces from the Ukraine was a clear sign that he wants to take the heat out of worst East-West row since the Cold War.
True, we have heard this before from Mr. Putin, but video footage of Russian troop movements suggests this time he might be ready to actually behave. Why might he do this now?
- It may also indicate that the Russian economy, on the brink of recession, is feeling the pain of the Western sanctions imposed over the Ukraine crisis.
Of course, the above motivation is not new. The obviousness of it has been present since Europe and the US rejected Russia’s involvement with loud political rhetoric and sanctions.
My point, relative to the market, is this. If this is the end of Putin’s blustering and he decides to end this standoff in Ukraine, or, at a minimum, he decides to let events unfold without interference, then the market has a real shot at breaking through the frustration that has plagued it since late March.
Another reason I am feeling optimistic is my small-cap trades began seeing green yesterday and today more are seeing green. I am not out of the woods on them, but they too might have found the bottom. If so, then on the way up I have an opportunity to bolster my positions.
- China’s exports rose 0.9 percent in April from a year earlier, while imports rose 0.8 percent, leaving the country with a trade surplus of $18.5 billion for the month, the Customs Administration said on Thursday.
The angel of optimism also whispered sweet words about China’s news this morning. Personally, I can take or leave news about China, as I have my fixed position on that issue and have for some time – China is not an economic issue. It is doing just fine with a growth rate of 7.5%. In fact, China’s problem is not that it is slowing down; it is that it might slow down too fast. On that front, it is taking firm steps to cool its red-hot growth. What the market does not seem to understand is that the steps the government is taking to slow the economy down will result in bad data from time to time. So be it.
- Do you ever get the feeling the market is explicitly trying to aggravate you, or frustrate you into submission? If it ever happens, it’s happening right now.
The above is tongue in cheek, certainly, but it is important to note that one cannot take the market’s behavior personally; rather, it is important that one should never react emotionally to the market. It is what it is and it does what it does without care, concern or even awareness of its participants. Basic stuff, but when the market behaves the way it has over the last six weeks or so, one can get caught, as I have, but one has to keep his or her cool and act only on what they know, their truth, so to speak.
My truth is the money will flow back into “risk-on” investments, eventually, and that could be sooner rather than later if Putin follows through on backing off. In the meantime, I might get bored with the market, as I have been, but I am not emotional about it. I have faith in my truth.
- We’re standing ready to act, anticipating that the scales will tip one way or another very soon. We plan on being one of the first to jump on the trend once it actually develops.
There is a sense of tentativeness in the market today, even if I feel optimistic. That might take some to time to go away, but the market breaking through and holding above the ceilings that have kept it back will go a long way toward bringing the bulls charging in again. We have been to this place more than few times in the last five years, so we know what we can expect if the market can lift itself past this latest resistance …
Has anyone heard of “biosimilars?” Apparently, the industry it is not new, but, according to the SmallCap Network, it is something to look into. There just might be some opportunity in the industry.
- While it wouldn’t be accurate to say biosimilars are a fledgling industry, it’s only been in the last couple of years that we – and the large pharmaceutical companies that are being threatened – need to bother worrying about them.
I am not sure why we need to worry, but, according to the article referenced above, the large pharmaceuticals are getting worried.
- We’re at the beginning of a movement that (1) is disruptive to the status quo because (2) it puts a ton of pricing pressure on some key drugs.
I for one will check this out, but at this moment, I am dubious. It is hard to find an industry more protective of its fortunes than the large pharmas. They have a captive global market and the US Congress and the FDA have favored them time and time again. The big-pharma lobby is well endowed and quite aggressive about what it wants and what it does not want.
As I finish up today, the market is giving off a vibe of certainty. After yesterday’s strong move, it is following up with another robust move today. In the world of poker, we call this a “continuation bet.” It leads to the other players to believe you really do have strong hand. Often, belief is all the market needs.
Trade in the day; invest in your life …
