Interest rates have been on a downward path for almost 30 years. In May of last year, thanks to the Fed's taper talk, that direction has reversed. This week it was revealed that some Fed officials are actually discussing when to hike interest rates.

The discussion took place late last month during the Federal Open Market Committee meeting presided over by the new Fed chairwoman, Janet Yellen. Like her predecessor, Ben Bernanke, Yellen appears in no hurry to raise short term interest rates and has told the markets as much. Most investors, guided by past Federal Reserve comments, are not expecting a hike in interest rates until the middle of next year at the earliest.

So why discuss it at all? Actually, for me, any discussion of raising rates is a fairly strong indicator that both employment and the economy are continuing to gain momentum and are expected to do so in the future. That needs to happen in order to justify the present levels of the stock market and any further advances equities may make.

I am sure that the same dissenting Fed members who, for years, have opposed further stimulus by the FOMC majority are behind this talk of hiking rates. These are the "inflation hawks" and if they had their way, the Fed's gradual tapering of stimulus would be accelerated from its present $10 billion a month decline to something more meaningful.

But moving the discussion from fewer stimuli to raising rates is a quantum leap in monetary policy.  I do not believe anyone at the Fed is seriously entertaining a hike in short term rates before the middle of next year.

In the meantime, over in the stock market a bit of profit-taking has kept the markets from achieving their objective. Recent highs are within sight. The S&P 500 Index actually came within 2.5 points of that target on Wednesday (and five points on Friday) before falling back. I would expect more of this kind of action before we reach and then break those highs.

Nevertheless, a new high will happen in the weeks ahead, but it does not mean that sunny skies lie ahead. There are storm clouds forming. Record highs will be met by more profit-taking, which will create more declines similar to the one we experienced in January. This year, as I have written in the past, will not be like 2013. There will be more volatility and more declines, although by the end of the year the markets will be higher than they are now.

So far, I see little to fret about. Investor sentiment has returned to a more reasonable level. The economic data, despite the weather effects, continues to show improvement.  The technical charts indicate we are still in a bull market so what is the worst that could happen here? At the worst, we may see another sell off and establish a new trading range once we hit a new high. We could meander up and down for a few months. That would not be unusual since stock markets go sideways over 60 percent of the time. If that is what the future holds, I’ll take it and be satisfied to simply buy and hold.  

In the meantime, over in the stock market a bit of profit-taking has kept the markets from achieving their objective. Recent highs are within sight. The S&P 500 Index actually came within 2.5 points of that target on Wednesday (and five points on Friday) before falling back. I would expect more of this kind of action before we reach and then break those highs.

Nevertheless, a new high will happen in the weeks ahead, but it does not mean that sunny skies lie ahead. There are storm clouds forming. Record highs will be met by more profit-taking, which will create more declines similar to the one we experienced in January. This year, as I have written in the past, will not be like 2013. There will be more volatility and more declines, although by the end of the year the markets will be higher than they are now.

So far, I see little to fret about. Investor sentiment has returned to a more reasonable level. The economic data, despite the weather effects, continues to show improvement.  The technical charts indicate we are still in a bull market so what is the worst that could happen here? At the worst, we may see another sell off and establish a new trading range once we hit a new high. We could meander up and down for a few months. That would not be unusual since stock markets go sideways over 60 percent of the time. If that is what the future holds, I'll take it and be satisfied to simply buy and hold.

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.

Buyouts and early retirement packages are increasingly becoming a part of the American landscape. Not a day goes by when some group of employees somewhere are offered financial incentives to retire early. If it happens to you, this is what you should consider.

Is this voluntary or a forced offer? If it is voluntary and you take it, you can't apply for unemployment benefits. Forced retirement is akin to a layoff, where you either accept the deal or else. Your chances of getting unemployment are higher under the latter circumstances.

Clearly, the largest single benefit of a retirement incentive is the upfront financial reward. These incentives are typically tied to the number of years of employment and can be either a lump sum or some form of annuity. The simplest rule of thumb is if you were planning to retire anyway in a year or two and the company offers you a two-year severance package that's free money and you should take it.

If, on the other hand, you were planning to work for another four or five years, you must weigh the benefits carefully. For many workers, the most important factor is whether or not the company offers health benefits. A study by Fidelity Investments found that a 65-year-old couple retiring today without employer-provided health benefits needs at least $200,000 to finance out-of-pocket medical costs. ObamaCare may reduce that number somewhat, but it will still be significant, especially when you consider things like Medicare premiums, co-payments and Medigap expenses.

Sometimes the first offer is not the final offer. If your company really needs these cutbacks, you may be able to negotiate better terms. You might be able to improve any health benefits, or include help in a job search or additional training. For some, early pension payments might be possible.

But what if you just love your job; can't imagine what you would do without it and can't afford to retire? Much will depend on whether the offer is a prelude to larger layoffs in the future or is purely voluntary.

There are risks in not taking an early retirement or incentive buyout package that readers should understand. If you have been singled out by your company, there could be a target on your back. If your company is in some financial difficulty and looking to cut back even further, your days could be numbered regardless of your decision. In which case, the first offer you receive is as good as it gets. The next wave of layoffs may find you unemployed with no incentive package at all.

This could also be a great opportunity, if handled right. You might be tired of working there and this could be your ticket to a new and better job. If so, start looking right away. The economy is picking up and job opportunities are better than they have been for several years. If you find a job quickly, this buy out could be just like a big bonus and an opportunity to invest it towards your retirement. Your new job does not even have to pay as much, thanks to your severance package.

For others, it could be the starting point for that business you always wanted to create. You may be old enough and with enough experience to become a small-business owner, even if you are the only employee. You might even offer to consult for your old company at a price. The point is that an offer is better than no offer at all. Treat this as a challenge and an opportunity, rather than the end of the world.

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.

What a difference one week makes. All the concerns that were ostensibly responsible for the stock market's 7 percent decline in January have already been forgotten. It appears investors are bound and determined to push the markets back to the highs.

The markets were up four out of five days this week. Clearly, by Friday, the averages seem to be running on fumes so a bit of a pullback would not come as a surprise. Several technical indicators are screaming overbought conditions. Yet, short sellers beware. It is going to remain very difficult to make any money betting against this market.

The question you may be asking is what happens once we regain the highs. Do we forge ahead or will there be a period in which the markets trade in a range? The likely scenario is a range bound market for a few months as the fundamentals catch up to the price level of these equity indexes.

This earnings season did nothing to heighten expectations that companies will be able to continue beating estimates. Less than half of all companies reporting so far have beat estimates. Most came in on the money, while a minority failed to live up to expectations. That would make this quarter's numbers a net neutral.

Naturally, just about every company that has disappointed has blamed the weather for their results. Even though this winter's brutal storms have definitely impacted American businesses' bottom lines, I suspect it is an all-too convenient scape-goat but it may give us hints to what is ahead.

Most economic data reflects what has happened in the past, so I suspect that we will see some disappointing numbers over the next month or two. There will be the usual debate among pundits on whether that weakness reflects a one-off, weather-related slow-down or something more threatening such as a slowdown in underlying economic growth. It could furnish an excuse for the markets to slow down or even mark time until the future is a little less snow packed.

I say hogwash to those fears (if they occur). The economy is growing and will continue to grow throughout the year. If there is any weakness in the stock market because of a perceived slowdown, that, in my opinion, would be another opportunity to buy the dip and nothing more.  

In the meantime, you may have noticed that the politicians in Washington are playing nice. Color me cynical, but this week's passage of the debt ceiling is all about mid-term elections and nothing more.

 Republicans and Democrats are desperately trying to repackage their ineptitude before November. Both sides are hoping that if they drop their penchant for confrontational politics now, the voter will actually believe they are turning over a new leaf and should be given a ninth or tenth chance to perform the duties they were elected to perform. It is all smoke and mirrors and you deserve what you get if you fall for it.

The S&P 500 Index is only 12 points away from its former high. If you were thinking of putting new money to work this week, I would hold off and see what happens. We could very well drop back to 1,800 or a little lower so keep your powder dry for now.

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.

Both houses of Congress passed the debt ceiling this week with no strings attached. That means that global investors will be assured that the United States will honor its commitments until at least March 15, 2015. Should we care?

Aside from the moral question of paying one's debt payments on time and a real catastrophe if we don't, the debt ceiling has been one 11th-hour deal after another. It has been pure political theater in this country since 2009. In the Republican-controlled House, only 18 out of the GOP's 232 majority voted for the bill. Two Democrats voted against it. Are you surprised?

If one were naive enough to believe that the Republicans actually believed that America's "out-of-control debt ceiling" was the most dangerous threat to this country, well, I have a bridge I can sell you in Brooklyn.

Both parties clearly understand that the debt ceiling is simply the money that we already owe to our debtors. It is money already spent by our government. Read my lips: by the time it has become debt it has already been spent.

The truth is that both sides of the aisle continue to spend money like drunken sailors. The only difference is in what they buy — guns or butter. Take the latest farm bill, for example. Food stamps were cut, thanks to the GOP, but farm subsidies to the nation's farmers (of whom 80 percent are giant corporations) sailed through the House to the tune of $1 trillion in spending over the next five years. What needs to be reduced is the money government is spending month after month and year after year and there's no indication that will change anytime soon no matter who is in power.

Remember that it is the Republican-controlled states (Red States) that receive the majority of government social spending. For all of their posturing about reducing "welfare spending," the Republicans are not about to bite the hand that feeds them. It's simply the mix of spending that changes between the two parties, not the amount.

Historically, the Democrats tend to spend more on social programs. The Republicans maintain social spending, while cutting taxes. Democrats and Republicans alike have always been happy to spend on defense. Bottom line: both approaches increase the deficit and the debt ceiling.

Clearly, the abrupt turnaround in the Republican's willingness to drop the debt ceiling issue has everything to do with the coming mid-term elections this year. The 16-day, Federal government shutdown last year was a national fiasco. As a result, Republican strategists quickly decided that the party needed to take a break from confrontational politics, at least until the elections are over.

They are counting on the fact that we will forget their past sins by the time November rolls around. It remains to be seen whether voters will be dumb enough to accept their new image as the party of compromise but if they do, and then the GOP has a good chance of capturing a majority in both houses this fall. If their strategy fails, they can always quickly return to partisan politics. Readers please note that the debt ceiling deal expires in March of 2015 and that is no coincidence.

 The pretense that the debt ceiling is some kind of line in the sand that America must not cross is misleading, if not downright duplicitous. At least investors will be spared the needless drama of a debt ceiling battle for the remainder of this year. Hopefully, after the election, both parties will relinquish the debt ceiling as their favorite hostage but I won't hold my breath.

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.

The markets have weathered the recent storm of selling and have sprung back fairly quickly this week. There may still be a squall or two ahead, but it appears the worst is over for now.

We still have not tested my target of 1,709, the 200-day moving average (DMA) on the S&P 500 Index, but we were close. We fell to 1,739 intraday on that average, which was just 1.7 percent shy of my target. That's close but no cigar for me. Still, from the peak of the market to this week's low, the S&P 500 declined 6 percent. That was a reasonable decline.

It was enough to reduce the overbought conditions of the market and to reduce the overwhelmingly bullish sentiment of investors that had kept me cautious for most of the first month of the year. The question that remains is whether the markets have a larger drop in store for us sometime in the future.

In the meantime, I suspect we are on our way back to the highs, around 1,850 on the S&P 500. Once the averages regain those levels, we may climb even higher. Exactly how we get there will be important.

If the rally is fast and furious, while investor sentiment becomes increasingly complacent, then once again that exuberance will set us up for another implosion. The next time around, however, the pullback could be in the double digit range. So what will I be looking for in gauging the future risk of a sharp downturn?

I want to see a broad-based rally; one with increasing volume with all sectors performing well. On the other hand, a rising market, where advancers have a hard time outnumbering declines, and where valuations remain stretched with fewer and fewer stocks participating will turn me cautious once again. Under those conditions, I would expect renewed weakness and a deteriorating technical picture of the markets.

However, those are future concerns, which could or could not develop in the months ahead. For right now, the pullback is essentially over. What lessons readers should take away from this experience are two-fold. Number one, the markets will have these kind of sell-offs 3 or 4 times a year. Although it is easier to spot a potential short-term decline, it is practically impossible to call a short-term bottom. That's why I advised you to do nothing.

Number two, attempting to avoid these sell offs by trading out and then buying back into the market is extremely difficult, if not impossible, on a consistent basis. Let's say you did not follow my advice, but instead sold out a few weeks ago when I first advised readers that a pull back was in the offing. So far, so good. Congratulations, you saved some money but when do you get back in?

My target for a potential bottom was the 200 DMA on the S&P 500 Index, which we never reached. Remember this forecasting stuff is an art, not a science. Instead, it was the Dow Jones Industrial Average that hit and broke its 200 DMA on Monday into Tuesday and then bounced. The rest of the indexes took heart and followed the Dow higher.

No harm done for those who took my advice and stayed fully invested. Your paper losses are rapidly dwindling as the markets gain traction. But for those short-term traders who are still waiting for the S&P to breach its 200 DMA, well, that's my point.

Do you hope the markets' bounce will fail and go lower from here, what if it doesn't?

Will you be forced to chase stocks higher? As I've said, getting back in is a lot more difficult than you may think. While you ponder your next move, the rest of us can be grateful that this correction is over.

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.