Stocks flew out of the gate yesterday thanks in part to a stronger than expected ISM manufacturing report. After the report was released, the Dow Jones Industrial Average (chart) was up over 150 points, then pared its gains closing the day up only 70. This morning stocks are mainly lower trading in a narrow range. So now that we are in October and in the final quarter of the trading year, will volatility finally kick in? After two months of tepid volatility and rare August and September market gains, we may just be in store for what most market pundits have been calling for all summer long.
Once again all eyes will be on this Friday’s jobs report to see if there is any sign of meaningful hiring in the private sector. I am not sure how the market will react if hiring remains weak because this might just spur the Federal Reserve to expedite its highly touted stimulus programs. Should that be the case, once again equities most likely will continue to benefit. The challenge I think most traders and investors have is with such a weak economy and corporate profits declining, how can one feel comfortable being long this market? The answer is seemingly a broken record, so long as we have the Fed as our backstop, volatility should create certain buying opportunities. Make sure to always consult a professional financial advisor before implementing any investment strategy. Good luck to all.