Another day of consolidation with the Dow Jones Industrial Average led the entire market lower. Small caps weren’t too far behind the Dow, but with lighter volume neither index came under distribution. Volume was lower across the board as the S&P 500 and NASDAQ both put in solid consolidation. We continue to see nice action in our stocks giving us confidence we are simply taking a breather. So far so good with this uptrend and we continue to see positive signs from our stocks. There isn’t anything the market is showing at the moment price wise indicating this uptrend will reverse in the near future. As we move forward if conditions change we’ll be on top of and we will adjust accordingly.
The consensus now is the hand off between a healthy economy and the Fed will take place very shortly. Many believe because there will be a smooth transition the market will simply continue to push higher. I am not sure how one can be so confident about the direction of the market so far in advance. We can remember how many were nervous regarding the Taper and the market shot higher. Sure we hit a rough patch at the start of this year, but we have recovered quite a bit. The S&P 500 continues to hit new highs. So much for the Taper being a dark cloud over the market and it proves sticking with the trend is a much better approach. The market simply does not care what you think. Get over it.
Tomorrow we’ll get a slew of data regarding jobs and retail sales. However, the real story will occur next Wednesday when the Fed will have another rate announcement. The Fed typically hints well in advance any changes to their policy announcements. There hasn’t been much chatter over an adjustment to the Taper and rates it doesn’t lend itself for the Fed to change their stance. Even if we knew what the Fed would do there is no guarantee we would even get the market direction right. There will be quite a bit of nervousness leading up to the Fed, but we will not waiver from what price is telling us.
Stick with your winners and ignore the noise.
