Summary:
·
Friday's results were anything but choppy as I
suggested they would be. A huge run up
in price after the market opened in NY.
Volume was very high in context of July's daily volume. There was
much speculation (that I too got caught up in) about a major correction
coming. Naturally we would all like to
know the direction of the market in advance - for the future is where money is
made - not the past or the current moment.
Good luck with that! The best
thing we can do is to plan what to look for and move tactically to address our
objectives.
·
Last week:
o
The stock market in July has shrugged off the
Portuguese banking crises, NY times (and others) explaining the stock market
valuation is too high, Dr. Yellen of the Feds bashing BioTechs and other small
tech stocks, weak economic data, and so far geopolitical concerns.
o
The price is moving up after a triple digit sell
off after the downing of the Malaysian Commercial Aircraft.
o
Good News
- Container counts are up, Earnings are positive so far, Yellen's testimony was
market friendly overall, Health Care costs are improving and taking a lower
share of the GDP than expected, (some very bad news, however, CBO
(Congressional Budget Office) is forecasting a fiscal crises unless something
is done about Federal Spending on Health Care.
Surprise?
o
Bad News - Industrial Production is lower than
expected, Housing data including housing
starts and building permits missed expectations (badly?). Consumer Sentiment fell. Geopolitical concerns causing death and
untold human suffering through injuries, starving and disease seems intractable
and growing.
·
This week:
o
Geopolitical concerns over Isreal and Hamas are
putting selling pressure on prices this morning. The Ukrainian Rebels will not allow experts
to go on site, and they are resisting any effort to remove more bodies. Russia faces tougher sanctions, and investors
(and politicos) worry about what Russia's response will be. Oil's price seems pretty steady considering
the issues with Russia. Worry about any
financial problems coming from Portugal or Spain affecting the Eurozone seems
to have receded to the background.
o
Today there is little economic news. The focus will be on "rumors" out
of the middle east, Russia and the Ukraine.
o
For what it is worth for NY trading: DAX Index fell below the 100 day MVA. Next support seems to be around 9600. Stoxx and FTSE are weak. Italy's industrial orders were down by
2.1%.
o
China is set to issue its first mortgage backed
bond issue in six years. China's real
estate market has been very soft, and this is seen as a capitalistic attempt to
shore up real-estate.
o
Corporate Earnings are the key events for this
week. Just under 150 S&P 500
corporations will report this week including Apple, Microsoft, Verizon and
Coke.
·
Result? Choppy
- summer doldrums will ruin any major moves.
Remember the world is a very dangerous place now, and geo-political
factors can move the USA equity markets down in a NY minute. I expect Monday will focus on geopolitical
concerns, with earnings taking center stage unless something unexpected happens
in the middle east or the Ukraine.
·
If you were frightened by the drop in price last
week and its affect on your portfolio value, then consider that you need to
review your stock portfolio. You cannot
react tactically and effectively if you are paralyzed with fear. Take out insurance on your positions if you
understand how. Most importantly decided
precisely for each investment where you will liquidate and go to cash; waiting
for the next opportunity.
·
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