Watching the market action since last Thursday, I can’t help but feel it is settling into a nesting place. The action in the market reminds me of how my cat behaves when he comes onto the bed. He jumps up, walks around a bit as if agitated, finds a spot he likes, massages that spot for a minute or so, and then he drops down, curls up, and begins purring. Within a minute or so, he is quietly asleep. Is this what the market is doing – nestling in for a catnap?
I base my question on nothing beyond a feeling, but in my head, I can’t help but see the image of my cat settling into a nap as I watch the market, especially after I looked at the chart of the DIJA for the last five days. If you think about it, it makes sense, actually.
For the last year, the market has worked hard to make its gains. It has defied predictions of demise, and continued to work its way to highs not seen since the spring of 2008. That is three years of struggle just to get back to where it was, and to get higher than it was a just year ago, it struggled immensely starting in May …
The old market cliché of “sell in May and go away” should perhaps be amended to April, as the stock market had its worst May performance since 1940, with the Dow Jones Industrial Average down 8% for the month.
If you remember, the downward slide just about one year ago began with fears about the European debt crisis and the scare from the “flash crash” on May 6th. That slide continued through June, July, and August. The market mindset changed in September when it began climbing steadily right through to today. That is a lot of work, which makes me think it needs a rest, a catnap if you will.
I base this “analysis” on nothing but a feeling. Does that make it worthless? No, not really when compared to the high-tech analyses I looked up from last year. Admittedly, I spent little time researching, but that was because the first few I came up with predicted, well, demise. According to the ones I read, the technicals and the fundamentals suggested imminent collapse over the longer term. Actually, just reading those made me tired, tired of those who predict with certainty something as fluid and irrational as the market.
So, without any formal analysis, I predict the market will settle in for a bit. I predict it will wait for more certainty about the issues facing it, such as the debt problems around the world. I predict the market will settle in for a little catnap, and like the cat in the nap, its senses remain on, and like the napping cat, if it feels the slightest “sense” of danger, it will spring up prepared to run. Wow! How’s that for specifics? And I did it all without a chart, an indicator, a teacup, or a P/E ratio. Phew! Now, I am tired. I think I need a nap …
Trade in the day; invest in your life.
Trade Ed
