For those of you out there looking for a market correction, it appears it has arrived. The new instability in the market now coincides with the budget battle and the pending war of words coming about raising the debt ceiling.
“The Treasury Department now estimates that the United States will reach the debt limit between April 15, 2011, and May 31, 2011,” senior Treasury official Mary Miller said. If the ceiling is not raised, the United States would only have weeks before it runs out of cash to pay its bills, according to government estimates.
Adding the above to the instability in the Middle East might possibly signal a market retreat larger than expected (at least on my part). The market seems mixed as to direction this morning. The end-of-day trading will gives us a better picture of what the near term will be. Interestingly, the news this morning about unemployment did little to boost the market and whatever positive affect the news had, it is now gone.
NEW YORK (Reuters) – Private employers added 217,000 jobs in February, beating analysts’ expectations, a report by a payrolls processor showed on Wednesday. Economists polled by Reuters had expected a rise of 175,000 in February. The January figure was revised higher to 189,000 from 187,000.
If the market does not spin into a large correction, it most likely will become more volatile. Certainly, the VIX is suggesting this is and will become the case, at least in the near term, at least until we get through April here and the Middle East has some time to settle down, if it does. Libya is on the precipice, but there are signs the crazy man Kaddafi will soon be gone. After that, it is all about how the pieces get picked up and put back together. “All the King’s horses and all the King’s men …”
For what I do with the market, these times of uncertainty are not good. As you know, I believe strongly in fundamental analysis, but in these market conditions, technical analysis seems more appropriate for gauging market movement. The ups and downs we are about to experience have little to do with the fundamentals of either our economy or the market, and they have everything to do with perception and fear, however incorrect or short-lived.
If you detect a sense of weariness in my writing today, it is because it is there. Our winter is dragging on with cold and wet days. This seems to wear me down, as does the shift in market sentiment I described above. Combined, these two forces tug on my emotional side. This state is never good when making decisions about what to do in the market. Perhaps it is time to nestle in a bit and watch the market flow. There is nothing wrong with taking a break, nothing wrong with simply pulling back a bit until I feel (or you feel) better about things, at least until the market stabilizes or the warm, sunny weather returns.
Trade in the day – Invest in your life
