Home About Archives RSS Feed

@theMarket: A September to Remember

Bill Schmick

It was a strong September, the best in 70 years, with the Dow up more than 8 percent for the month while the other averages were not far behind. As the third quarter closes, however, the clear winners were precious metals. But it appears that both commodities and stocks have more to run in the weeks ahead.

At the close of the week, we had a bit of profit taking in stocks as well as commodities, but that was to be expected. As long as the economic numbers continue to come in better than expected, the data will provide support for further upside in these markets.

This week most of that data surprised analysts. Second-quarter GDP growth rate came in at 1.7 percent versus an expected 1.6 percent and was 3.7 percent in the first quarter. The core PCE price index gained 1 percent versus 1.2 percent expected. Consumer spending gained 2.2 percent versus a prior gain of 1.9 percent. The New York "ISM" Index of business was 58.3% while analysts expected 55.6 percent and the initial jobless claims were down by 16,000 to 453,000, which were also better than expected.

Numbers like these cheer investors and help justify why the stock markets are climbing after four months of range-bound trading. I believe that markets can correct in two ways: a sharp, painful decline or a period of consolidation where stocks trade in a range until all the sellers have sold. Given the historical run-up in stocks from March 2009 through April 2010, I had warned investors that a correction was due and a period of marking time should also occur while the economy played catch-up with the gains in the markets. I believe that is exactly what has happened over the last five months.

The 1,150 level on the S&P 500 Index has proven stubborn resistance this week. Every time the bulls assaulted that line in the sand, the bears fought back, driving stocks lower again, but not by much and that is what gives me confidence that the bulls will break through that level at some point

Over in the commodity corner, gold has powered higher hitting its 11th record high in a month, trading at $1,316 an ounce before falling back to regroup. Silver has had an even more spectacular run and traded above $22 an ounce before also falling back. Clearly investors are "buying the dips" in those markets. I agree with that strategy. Buyers beware, however, because all that "feel good" emotion as precious metals hit new highs can quickly turn to fear and panic when (not if) commodities correct. These puppies have had quite a run, so new buyers would be advised to wait for the inevitable sharp but short pullback before buying.

As for the stock market, if we punch through 1,150, the next resistance area for the S&P 500 is around 1,180. Notice, too, that at that level we will have almost re-traced all the losses incurred since the market's April high.

One final note, I won't be writing a column next week since I'm going to Maine for a week of kayaking and hiking with my wife and our dog Titus. I'll miss you.

 

0 Comments
Tags: metals, quarter, growth, correction      

Support Local News

We show up at hurricanes, budget meetings, high school games, accidents, fires and community events. We show up at celebrations and tragedies and everything in between. We show up so our readers can learn about pivotal events that affect their communities and their lives.

How important is local news to you? You can support independent, unbiased journalism and help iBerkshires grow for as a little as the cost of a cup of coffee a week.

News Headlines
Pittsfield 4th of July Parade Canceled Again
Vigil Scheduled for Murdered Trans Activist Jahaira DeAlto
Brian J. Dempsey MD Pediatrics Welcomes New Pediatrician
BCC Announces Virtual Info Sessions for Criminal Justice and Human Services Programs
Q&A: Williamstown Barn Restoration Moving to Next Phase
Flushing of Pittsfield's Water System Week 3 Begins May 10
Adams Aiming for Summer Reopening of Public Buildings
Images Presents Annual 'Fresh Fest' on Food, Farming
Eagle Newspaper Group Sells Off Vermont Publications
Berkshire Money Management Welcomes Two New Team Members
 
 


Categories:
@theMarket (369)
Independent Investor (450)
Retired Investor (42)
Archives:
May 2021 (2)
May 2020 (8)
April 2021 (9)
March 2021 (8)
February 2021 (8)
January 2021 (5)
December 2020 (6)
November 2020 (8)
October 2020 (7)
September 2020 (6)
August 2020 (6)
July 2020 (10)
June 2020 (7)
Tags:
Metals Europe Election Stocks Wall Street Stock Market Oil Economy Recession Debt Ceiling Currency Selloff Federal Reserve Banks Europe Taxes Interest Rates Pullback Congress Retirement Markets Deficit Crisis Commodities Fiscal Cliff Bailout Japan Euro Rally Housing Jobs Debt Energy Stimulus Greece
Popular Entries:
The Independent Investor: Don't Fight the Fed
@theMarket: QE II Supports the Markets
The Independent Investor: Understanding the Foreclosure Scandal
The Independent Investor: Does Cash Mean Currencies?
@theMarket: Markets Are Going Higher
The Independent Investor: General Motors — Back to the Future
The Independent Investor: How Will Wall Street II Play on Main Street?
@theMarket: Economy Sputters, Stocks Stutter
The Independent Investor: Why Are Interest Rates Rising?
The Independent Investor: Will the Municipal Bond Massacre Continue?
Recent Entries:
@theMarket: Stocks Make New Highs
The Retired Investor: Are Inflation Fears Real or Imagined?
@theMarket: Fed Signals Equities 'All Clear' But Markets Don't Care
The Retired Investor: Empty Oceans
@theMarket: Stocks Hit With Possible Tax Hike
The Retired Investor: Our Hospitals Are in Trouble
The Retired Investor: A Highway of Opportunity
@theMarket: Stocks Grind Higher as Bond Yields Retreat
The Retired Investor: Water Becoming a Rare Commodity
@theMarket: Spring Has Sprung in the Markets