A better than expected retail sales figure helped boost stock futures prior to the open. Released at the same time inflation data remained tame and was in line with expectations. Existing home sales wrapped up the economic releases of the day and it disappointed. Economic releases would be forgotten rather quickly as the market would then turn to whether or not the Federal Reserve minutes would reveal tapering plans. Upon the release the market would falter as the minutes should the Federal Reserve’s willingness to taper in the coming months. Same old sorry, but what was interesting is we saw volume drop on a Fed day. While price wasn’t kind and continued weakness in a few names volume didn’t indicate institutions were selling. This market remains on shaky ground and we’ll continue to stick to our plan.
FB, TSLA, and 3D printing stocks are a good gauge of how the market is faring at this point. We are seeing quite a bit of weakness in these stocks and now we can add Z to the list. Momentum at this point seems to be on shaky ground. Perhaps we will see rotation into new names taking this market higher, but we are not seeing evidence of this just yet. It is important we keep a look out on emerging leaders and ride them for everything they’ll give up.
We believe it is completely useless to try and game our trading on whether or not the Federal Reserve will taper and end QE. No one knows the future even the Federal Reserve cannot predict the future. It is pointless than to try and guess what tomorrow will bring. We have a process to determine when to get long or short, when to cut our losses, and when to take profits. This process puts us ahead of just about everyone and why we have been around since 2007 and weathered 2008-09. Try and ignore the noise being spewed by the financial media and every little data point the Federal Reserve may or may not use to determine when to taper.
Stay focused and follow the plan. Cut your losses and ride your winners.
