Once again, we are in one of those pivotal moments regarding the market. It is difficult to see tomorrow, much less next week. Looking at the market, one has to ask: what is the trade? After all, the driver right now is Japan, and that tragic happening is causing panic. In fact, the downside push from the events in Japan has eclipsed the Middle East concerns that drove oil prices to scary highs. Oil is dropping, so is that the trade – shorting oil?
In the midst of this dramatic market reaction, stocks in the solar sector are rising. Is this the trade – alternative energy?
The Fed will come out with its talking points later today. Will it end QE2 in June as scheduled, or will offer up a hint pointing to QE3? Maybe the U.S. dollar is the trade.
What about gold as a trade? One would have thought with this tragedy, gold would go higher, but it hasn’t. In fact, earlier today, it fell through the $1400 level. To short or not to short, that is the question.
The financial media is no help here, either. All they can do is hype the losses with “Breaking News” headlines such as “NASDAQ Loses Gains For Year,” or “Stocks On Pace For Biggest Monthly Drop Since August.” The latter headline is actually quite amusing, since we are only halfway through March, and as any market watcher knows, two weeks in the market, well, you know …
No one knows how the Japanese nuclear issues will work out. Today, the problems seem immense, protracted, and insurmountable. Tomorrow? If the past is any guide here, these nuclear problems do ultimately get resolved, even if residual problems remain for some time. Think Chernobyl and Three Mile Island …
In the meantime, the economic data coming through the din of despair is still good, still pointing to a strengthening economic recovery. Clearly, though, this is not enough to change the market bias.
The Empire Manufacturing Survey for March came in at 17.5, which is slightly stronger than the 17.0 that had been expected, on average, among economists polled by Briefing.com. The prior month’s Survey came in at just 15.4. Separately, import prices for February increased by 1.4% after a 1.3% increase in the prior month. Excluding oil, import prices increased just 0.3% in February. They had increased 0.8% in the prior month.
I don’t know about you, but I cannot see three feet in front of me regarding the market. The fog of uncertainty is so thick that pulling off to the side of the road is the only prudent thing to do. Maybe this is the trade – get to cash. Better safe than sorry, right?
Trade in the day – Invest in your life
