The old fades away and the new takes hold. This reality of life is not new or unknown, bimes, the old passing ignites wistfulness, a sense of loss, as that which once was mighty heads toward extinction.
- On a recent morning in the Chicago Board of Trade’s soybean futures pit, the trading action looked like this: One trader hiked up a leg onto a metal railing, stretching his hamstring; another passed time bouncing a green rubber ball; a third yawned.
Computers can do many things better than humans, and trading is one of those things. Lesson: Pay attention to the world as it moves along …
- The bear camp is howling about another overbought condition and the fact that valuations are beginning to move away from fair value. The glass-is-half-empty gang also continues to moan about the idea that the Fed’s ZIRP (zero interest rate policy) is the only thing keeping the indices afloat. Thus, our furry friends contend that the current rally is not going to end well and that we should be bracing for a replay of 2008.
I suggest paying attention to the bear lament as it continues. No, not because I think they are right, rather pay attention to the once mighty headed toward, well, not extinction, but certainly some deep grumbling and a bit of egg on the face.
- It’s August – officially the dog days of summer – a time when market volatility picks up and stocks have been known to wilt.
Summer time in the market can be hot, as in volatile. The last few summers have been hot, but what should we expect this August?
- In summers like this one, where July was a positive month for stocks, the Dow has been down 53 percent of the time for the month of August. But with stocks sitting at all-time highs and no big catalysts in sight for the next few weeks, strategists are talking more about a sideways trade than a big move up or down, barring any unexpected macro event.
Aside from the historical reference, the above analysis actually makes sense to me, and given that I don’t generally find most analyses helpful, I am paying attention, especially as the market slides into the red today after some stellar US economic data. My guess is the market needs a breather after setting more record highs and that is fine for now, but the economic news I just referenced is real and getting more powerful.
- The pace of growth in the U.S. services sector accelerated in July, picking up from a three-year low as new orders surged to their highest level in five months.
- The Institute for Supply Management (ISM) said its services index rose to 56 from 52.2 in June, easily topping economists’ expectations for 53. The service sector figure surpassed even the high end of forecasts and matched what had been the high for the year reached in February.
- Last week’s ISM manufacturing report showed the sector’s growth hit a two-year high in July.
The economic data suggests the now annual spring swoon is over and the now-annual fall spurt is coming.
Unless the US politicos derail confidence with more antics about the budget and the deficit, the market should repeat what it has done the last four falls – go up. And, it won’t just be the US economy that propels the market upward. The other big economies will add some adrenaline as well.
- Eurozone business activity expanded for the first time in 18 months in July, as composite PMI increased to 50.5 from 48.7 in June, while services PMI rose to 49.8 from 48.3. Germany’s recovery gained momentum and the downturns in major economies such as France, Italy, and Spain eased further.
- China’s Non-Manufacturing PMI, which is designed to indicate the state of China’s services sector rose to 54.1 in July from 53.9 in June.
As I said, pay attention to the world as it moves along, but don’t pay too much heed to the glass-half-empty crowd. The old is passing and the new is taking hold.
Trade in the day; Invest in your life …
