Today is a good day. The market has opened strongly in the green on good news. It seems to be feeling better these days. Me? I am a bit sore from my DVD workout yesterday, but I will go it again today. Like the market, all I want is to feel better.
- Fears of action against Syria eased after U.S. President Barack Obama said Monday he saw a possible breakthrough in the crisis with Syria after Russia proposed that its ally Damascus hand over its chemical weapons for destruction, which could avert planned U.S. military strikes.
My-oh-my, the above is certainly good news for the market, and for the world. Imagine, if Syria turns over its chemical weapons for destruction …
- Economic data in China showed stronger-than-expected industrial output and retail sales showed their fastest growth this year, reinforcing signs that the world’s second-largest economy was stabilizing after slowing for more than two years.
“It’s the economy, stupid.” That quote from James Carville in the 1992 Presidential election will live on in politics because folks care about economic issues. Well, since the market r us, it too likes and moves on good economic news from China, Europe, Japan, the US, and every other economy that can affect global growth.
Yet, the market also moves on fear. The QE tapering nonsense in August is an example. I said then and I say it again now, QE tapering will happen and the market will adjust. But, that does not mean the market won’t jump about when the breathless media (BM) begins priming the QE tapering pump.
- With a potential military strike on Syria moving to the back of investors’ minds, Wall Street is forced to deal with the prospect of the Federal Reserve cutting back on its quantitative easing program later this month.
See what I mean. The BM just cannot help itself. Then again, more realistic and rational voices get airtime too, just not as much as those who stir the pot.
- The equity markets are adjusting to the notion of tapering just fine. Despite the recent headline risk from Syria, stocks have been reacting well in response to positive news. That marks a change from the “good is bad” thinking of the last few years when the perception was that the Fed was the only thing holding stocks higher.
So now, the tenor and tone of the conversation are changing as we close in on the actual Fed meeting that will decide the issue of QE tapering or not. The market is paying closer attention to the economic fundamentals and with the market busting through the technical analysts’ “watch out” points, the market will respond favorably to any more good news.
- The TD Ameritrade Investor Movement Index increased 5.95% to 5.16 in August as markets stumbled, meaning clients continued their pattern of selling the rips and buying the dips – the index previously fell in July as stocks rallied.
Yup! I have learned over the years that there are times of genuine fear, such as 2008 and 2009. I have also learned there are times of faux fear, a BM frenzy that in low volume markets takes the market down. We just went through one of those periods in August. I hope folks bought the dips because so far this September (the worst of all market months we are told), the rips have been the play.
Oh! One more thing. The fear pressure is coming off the oil market, and with supply abundant and demand ebbing, this can only help with economic improvement.
Trade in the day; Invest in your life …
