Okay, every now and then, I receive a question that speaks to a real problem in the world of trading and investing. Some folks actually believe a person or persons have the ability to predict market movement in short order. One has a decent chance of doing so a bit into the future, if one does his or her due diligence, or one is a wizard at reading charts, but, generally speaking, next day predictions are akin to, well, flipping a coin. So, here is the question …
We would like to know where the market is going tomorrow July 5th and in the next week or two before earnings are announced?
Just because I spout off about the market on a daily basis, my “predictions” about market movement are no more worthy than the next guy who does his due diligence, or reads his chart. In any case, I don’t believe I have ever pretended to predict what the market will do the next day, at least with any certainty. In fact, every weekday, I listen to and read what professional money managers have to say about what they think the market will do the next day, the next week, the next month etc. I can tell you these folks, who live and breathe the market to much greater degree than I do, are right and they are wrong. Only their rate of return is a true marker of their success. I suspect most all win more than they lose, however, they do lose, and sometimes they lose quite a bit.
The point here is that if you are looking for even the wisest among us to tell you what the market will do tomorrow, maybe you ought to think about finding another way to make your money work. As to the next week or two …
The lopsided apple in the apple cart is the political battle in Washington D.C. regarding the debt ceiling. Currently, most all pundits, Wall Street, and the market itself seem to think this is a non issue, that the two political parties will reach a compromise and the debt ceiling will be raised, as it has been every single time in American history. Frankly, I am not so sure, and as we get closer to the deadline, I suspect the market will tell us what it truly believes. Because I have doubts, I am prepared to get to cash as quickly as possible. If I do go to cash, and I am wrong, the opportunity to get back in will come. If I go to cash, and I am right, I will be a happy camper because the immediate fallout from not raising the debt ceiling will be nasty.
To bring this home, I don’t know what will happen in the next two weeks. I am just preparing for either eventuality. What I will venture to say, though, is if the politics of this mess are resolved quickly to the satisfaction of the market, I expect a continued rise in bullish sentiment in the near term. I suspect, as the questioner mentioned, corporate earnings will become the market focus. I have suspicions that Japan and high oil prices have affected earnings the same way those two ills affected the global economy this past quarter, but I don’t see anything truly devastating coming down the line in this regard. Then again, as I said, I am just another pundit spouting off about the market, so take whatever I say with a grain of salt, please …
Trade in the day – Invest in your life …
