The market is continuing its rebalancing today, but my small cap trades are holding on well. This tells me this “sell off” is not wholesale. At least it is a clue that this downturn is not full force. Yet, as the days go by with more selling, the clamor of voices yelling about the “big correction” increases.
- I think more than anything, the reason stocks dipped was just an “enough is enough” consensus – people are deciding to take profits. Thing is, unlike a news-prodded rally or pullback, the turning of the tide for the market’s psyche is a much bigger and much more potent force that could cause problems for a while. In other words, buckle up.
- The VIX is coming up and out of its rut, and for the second time in a couple of weeks it has pushed past all of its technical ceilings. This time, though, it looks like it’s on a mission and could really cement the trend into place.
- If it wasn’t mid-December, I would be an outright bear looking for a full-fledged correction of at least 10%!
On the other side of the equation, some voices are essentially saying what I am saying – the market will keep going up if the fundamentals are going in the correct direction.
- It’s getting boring. Stocks remain overbought and extended, and as we know, they can get more overbought and extended if all other indicators remain strong.
- As I have mentioned over and over, it is just very, very unusual to see a meaningful peak this time of year as well as a decline of any significance. “Usually”, the market holds on until the last few days of the year and early into the New Year before the bears make any headway.
The bears will have some say in the market throughout December, especially if the Fed meeting next week hints at or explicitly states that QE tapering is coming in December, or soon thereafter. I am not in agreement, however, that in the first quarter of 2014, the bears will make any significant progress toward that 10% correction. As always, we will see …
In the meantime, those who poo-pooed the retail sales in November, must be wondering what happened to their world view.
- U.S. retail sales rose solidly in November as Americans bought automobiles and a range of other goods, adding to signs of a strengthening economy that could draw the Federal Reserve closer to reducing the pace of monetary stimulus. The Commerce Department said on Thursday retail sales increased 0.7 percent last month after rising by a revised 0.6 percent in October. November’s retail sales increase was the largest in five months.
As well, those who think Q1 of 2014 will prove to be economically weak should consider the following.
- U.S. import prices fell for a second straight month in November as the cost of petroleum and food dropped, suggesting imported inflation pressures remained subdued.
The above simply means more money in US consumers’ pockets, which means more money to spend on goods and services. On top of that, the oft-maligned politicos in Washington have removed one large impediment to further US and global economic momentum.
- Republicans in the U.S. House of Representatives on Wednesday were falling in line behind a bipartisan two-year budget deal, indicating that the normally rambunctious group of lawmakers is not spoiling for a year-end fiscal fight.
Imagine that, the politicians in Washington D.C. are acting like adults. Imagine that …
Trade in the day; Invest in your life …
