The market is faltering again today, and this is actually a good thing for the longer term. Yet, like ancient humans huddling in the darkness of a cave explaining their fear of thunder and lightning in terms of powerful forces exercising dominance, the breathless media keeps explaining market movement in terms of powerful forces exercising dominance.   

  • But what is really interesting here is that the pundits, the “experts,” and the television commentators appear to be convinced that that which has just happened on Wall Street will continue to happen on Wall Street going forward. While the reasons given for the anticipated pause include all the “taper talk” as well as worry over the “budget battle,” the German election, and growth issues in China (none of which are new, by the way), the market prognostications are the same – there is nowhere to go but sideways or well, okay, down.

David Moenning’s eloquent appraisal above just about says it all. The voices out there screaming the market has nowhere to go but sideways or down miss the larger point – the market does what it will do, and it matters not what the “gods” decree.

  • The indices don’t tend to follow the consensus of what is expected too terribly often. No, the stock market has a tendency to go out of its way to frustrate the majority of the players, the majority of the time.

Even though the oracular voices are telling us to be afraid of the power out there just waiting to take the market down, the natural forces at work are larger than the market gods and their threats. Right now, the natural force at work is, well, lack of interest. The market just doesn’t seem to care about the lightning and thunder, or the sunshine for that matter.

  • China’s trade data for July topped expectations and provided evidence that the economy might be stabilizing following two years of slowing growth. Imports surged 10.9% on year vs. expectations of +2.1%, while exports rose 5.1% vs. +3%.

The warmth and light inherent in China’s continuing growth is not enough to bring the market out of its cave just yet, but the ensuing heat on commodities will likely force some dwellers to put some beads into that asset class.

  • Imports of oil and iron ore rebounded from multi-month lows last month as more raw materials were shipped in to rebuild depleted stocks.

So, when interest returns and the sun comes out in the form of powerfully positive economic data, the battling beings in the sky will fall away and both ancient humans and market players will celebrate. The former will stop shivering and venture outside and the latter will throw money into buying opportunities. Think Ford Motors …

Oh, and for those who still shiver in the dark about qausi -private agencies, such as Fannie Mae and Freddie Mac collapsing and causing another downturn, take heart in the following news.

  • Mortgage giant Fannie Mae earned $10.1 billion in the second quarter, aided by the recovery in the housing market. The government-controlled company has turned a profit in each of the past six quarters. Fannie said Thursday it will pay a dividend of $10.2 billion to the U.S. Treasury next month. Once the second-quarter dividend is paid, Washington-based Fannie will have repaid $105 billion of the roughly $116 billion it received from taxpayers.

Man-oh-man, the above reality will give the doomsayers fits, no doubt. Anyway, keep your money in and buy on the dips, although that dip might not be today.

Trade in the day; Invest in your life …

Trader Ed