Big Week For the Markets


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It’s been a relaxing few days for the markets, and today they’ve been back on the up. Momentum is positive in a big way, and for now, it’s got investors seeing green. But we’ve got a big week ahead: FOMC, Big Ben makes a speech, and to top it off – it’s earnings season.

I’m hoping against hope that the Fed doesn’t botch it this week. Obvious questions of state-contingency were raised when Bernanke brought up the idea of a time-table last time around. The effectiveness behind monetary policy is, after all, reliant on judicious input decision when under macro-production uncertainty. And I’m pretty sure a countdown won’t aid in curbing price fluctuations.

Investors don’t like knowing that Bernanke’s leash could be shortening.

I cannot stress how the concept of easing disrupts what should be simple reads into risk measures, future volatility, etc. Normal (or what could be considered normal) growth indicators are out of whack, even now that the market and economy alike are in definitive uptrends.

In reality, much (not all) of our current market-momentum is based not on fundamentals, but on what those fundamentals mean in terms of continued monetary policy. Produced outputs from a given economic indicator simply don’t lend themselves to clear outlook on future momentum.

Instead, a positive/negative indicator reading then translates to questions of continued easy credit flows. This produces much of the current topsy-turvy trading environment. In actuality, a piece of good news should logically lead to an influx in capital to the market in question. That just isn’t the case these days.

That’s why there’s been so much hype around Fed weeks as of late. And as the economy continues to show real signs of improvement, taper-talk will only get stronger…meaning more volatility surrounding weeks like the one upcoming.

This trading environment ain’t for sissies. And it sure as hell ain’t for those on the wrong side of a trending market.

I’m looking to go long on a few solid positions within the next week and a half, but I’m gonna wait for the dust to settle after the Fed spits its fire. It’s hard to tell whether trends are about to reverse.

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Traderchild | Market Commentary and Actionable Analysis
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