Home About Archives RSS Feed

@theMarket: Markets Turn Positive for the Year

By Bill Schmick
iBerkshires Columnist

It is official. We made a new high this week and the markets appeared to be in "melt-up" mode. So why is everyone cautious?

After almost two months of consolidation, the equity markets broke out once again, spurred by the knowledge that if the economy falters, the Fed remains ready to reverse course.

Yet, by Friday afternoon, the bears were fighting hard to ruin the party.

It was no accident, in my opinion, that Fed Chairwoman Janet Yellen's testimony before a Senate panel on Thursday was followed by a record-breaking gain in the S&P 500 Index. But by Friday afternoon, the benchmark index was barely holding its gains. True, not all the indexes have reached new highs. Dow Theorists won't feel comfortable until both the industrials and the transports also break out and confirm the gains in the other indexes.

Yellen, in her testimony, said that the central bank was studying the economic data closely. She said, "a number of data releases have pointed to softer spending than many analysts had expected. Part of that softness may reflect adverse weather conditions, but at this point, it's difficult to discern exactly how much. In the weeks and months ahead, my colleagues and I will be attentive to signals that indicate whether the recovery is progressing in line with our earlier expectations."

This is a departure from her upbeat comments over the last few weeks when she appeared more positive over the future prospects of the economy. So why did the markets go up? I believe investors assume that if the economy were to slow further, the Fed would reverse its recent tapering and some argue that the Fed might even inject more stimulus into the economy.

Readers may recall that I have been expecting to see a spate of disappointing numbers in the weeks ahead as the country continues to suffer from the impact of the Polar Vortex. Today's GDP data, for example, indicated the economy in the fourth quarter dropped to 2.4 percent versus 4.1 percent reported in the third quarter. Lower exports and consumer spending were the main culprits in the sluggish number.

My own belief is that once the country thaws out from this winter's deep freeze, activity will once again spurt higher. However, between now and then, the stock market may get spooked by fears that the economy is rolling over.

As for events overseas, specifically in the Ukraine, the markets have been able to absorb events without too much difficulty. Naturally, when tensions rise between Mother Russia and the U.S., one must pay attention to events. Vladimir Putin seems bound and determined to escalate the situation further but hopefully cooler heads will prevail.

There has been so much talk this week on whether the market is "topping" out that I have my doubts. I would stick with the game plan and remain invested. The worst that could happen is that we have another mild pullback and we fall back into a trading range.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.

0 Comments
     
News Headlines
1Berkshire Releases Report on Attracting, Retaining Millennials
North Adams Council Candidates Talk Economic Development, Crime
Central Berkshire Habitat Honors Volunteerism at Annual Meeting
Cheshire Had Looked at Joining Northern Berkshire School Union
Pittsfield Medical Associates Awarded Medical Leadership Role at Berkshire Place
Berkshire County Arc Hires Director of Brain Injury Services
Destination Williamstown Names New Director
Cultural Pittsfield This Week: Oct. 20-26
Adams Investigating Operations at Former Curtis Paper
Williamstown Finance Endorses Police Station, School Regionalization

Bill Schmick is registered as an investment advisor representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires. Bill’s forecasts and opinions are purely his own and do not necessarily represent the views of BMM. None of his commentary is or should be considered investment advice. Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com Visit www.afewdollarsmore.com for more of Bill’s insights.

 

 

 



Categories:
@theMarket (238)
Independent Investor (325)
Archives:
October 2017 (3)
September 2017 (5)
July 2017 (2)
June 2017 (8)
May 2017 (7)
April 2017 (7)
March 2017 (8)
February 2017 (8)
January 2017 (6)
December 2016 (2)
Tags:
Pullback Economy Crisis Oil Bailout Wall Street Commodities Debt Banks Europe Stimulus Fiscal Cliff Japan Rally Energy Recession Greece Markets Selloff Debt Ceiling Stock Market Deficit Retirement Metals Jobs Federal Reserve Currency Europe Election Taxes Euro Housing Stocks Congress Interest Rates
Popular Entries:
The Independent Investor: Don't Fight the Fed
@theMarket: QE II Supports the Markets
The Independent Investor: Understanding the Foreclosure Scandal
@theMarket: Markets Are Going Higher
The Independent Investor: Does Cash Mean Currencies?
The Independent Investor: General Motors — Back to the Future
@theMarket: Economy Sputters, Stocks Stutter
The Independent Investor: Why Are Interest Rates Rising?
The Independent Investor: Will the Municipal Bond Massacre Continue?
The Independent Investor: How Will Wall Street II Play on Main Street?
Recent Entries:
The Independent Investor: Taketh Care of Your Workers and They Will Taketh Care of You
@the Market: Markets Need a Time Out
The Independent Investor: Tackling Taxes
The Independent Investor: Time to Check Your Insurance Policies
@theMarket: NK Missile Dud on Wall Street
The Independent Investor: The Price Tag of Disaster
@theMarket: Markets Brace for the Weekend
The Independent Investor: America, the Battered
@themarket: Global Interest Rates Rise, Global Stocks Fall
The Independent Investor: The Market's Half-Time Report