After a terrible month for the markets in August, I titled my September 1st (blog) “New month – New beginnings” and as I suspected, the sell-off in August was a little overdone. Little did I know. You typically don’t see records set for the month of September for historically September and October tend to be the two worst performing months of the year. For now I think  you can throw the historic data out of the window for we have not seen this type of environment for stocks since the 30’s. My feelings now are buyer beware. When we essentially see a straight line up one must expect pull backs to occur.  A few things that concern me with this enormous rally is that it’s happening for the most part without the bank and financial stocks participating, also the volumes have been light and the market breadth was weak. Again even those metrics may not matter much with what the markets have to digest over the upcoming 3rd quarter earnings reporting season and the ever approaching mid-terms.

Congratulations to all that have been long this market but please make sure you consider how far we have come in such a short period of time.

Best of luck.

~George

I do not believe anyone expected the markets to be up almost a whopping 10% for the month of September. With only one week left we will see how this finishes out but what an incredible run nonetheless. So now what you may ask? Well don’t look now but 3rd quarter earnings reporting season is approaching and you may think how in the heck can companies continue to exceed expectations in such a tepid economic environment? Over the past several quarters companies have been able to beat their eps estimates and increase their bottom line by running their operations more efficiently which includes in part a reduction in their workforce. Well this perma-bull has been looking for top-line growth out of corporate America in order to believe that we are turning a corner in this economy. Odds are we are not going to see this yet so how will the markets react once the S&P and the other bellwethers begin reporting their results? Well considering this increbidle bull run we have been on one has got to beleive we are due for a pull back and maybe they will use the upcoming earnings reporting season as an excuse? If so don’t forget there is still a lot of cash on the sidelines that could come in on such pull backs and the mid-term elections could also play a key factor in placing a floor in the markets.

Whatever the case may be, this October and for that matter the rest of the year will not be for the faint of hearts. I expect volatility to increase for how could it not with such signficant events on the horizon. Best of luck to all.

Have a great weekend 🙂

~George

Some of the pundits think so. The President spoke today at a quasi town hall event discussing the economy, taxes and the recovery efforts. Personally I believe these markets are now breaking out of its 4 month or so trading range and the shorts could also be scrambling and contributing to the breakout that’s occurring. One caveat here as it pertains to this strong rally continuing is the Fed which holds it policy meeting tomorrow. Whether this rally continues or we head back into the multi-month trading range we have been in depends on the fed statement that comes out after their meeting. If it is a none event then these markets can indeed continue higher in anticipation of the change that is coming in Washington, the possible delay of higher taxes and once again the low interest rate enviroment we find ourselves in.

Good luck to all and have a great week.

~George

With the way the markets are behaving you would think that the economy is expanding at a rapid pace and unemployment is low. Well unfortunately the latter is not happening yet. If you try to tie the markets and the economy together it doesn’t make sense, does it? So why the strength and resiliency you ask? My takeaway from the September rally and the most recent overall market strength  continues to be the low interest rate environment we find ourselves in and the constant flow of global liquidity being injected into the system. Now couple that with the anticipation of the mid-term elections and you have the recipe for a respectable rally.

For me though it does not feel like a real rally. Maybe the reasons for my feelings are the constant negative headlines that the media is obsessed with delivering to us? Or the coming out of the closet of the “high frequency” computerized trading systems which are seemingly making the markets even more lopsided for the retail investor? Or could it be that I need to see some real business leadership out of Washington? I don’t know what it is yet, but what I do know is when I hear stories that individual investors are piling out of the stock market for the above reasons or the like, that’s usually when the big boys are buying their stock.

I do the best I can to filter out the bias news and the incessant negative headlines that are being fed to us daily. Grant it a lot of the business and economic news is very real and needs to be considered accordingly, but not to the point where it freezes you. Now more than ever patience and prudence is required when navigating the market waters and once the right opportunity presents itself you must have the fortitude to act.

Have a great weekend 🙂

~George

The markets are continuing their upward trend albeit on relatively light volumes. Still a very positive sign for the bulls, but can it last? Well now Washington is talking about tax cuts for small businesses, why now? Could it be that the mid-term elections are right around the corner? Is there some sort of correlation with the most recent market strength and the upcoming mid-terms? You better believe it! In my humble opinion the markets are setting up for a Republican landslide in both the House and Senate. No matter what side of the aisle you are on it is rudimentary that you do not raise taxes when you are trying to ignite an economy. That said, whomever gets in don’t raise taxes, period! Give American businesses the proper incentives and confidence to grow their companies again so they can start hiring in a meaningful way.Washington also needs to give entrepreneurs the confidence to move their enterprises forward without the threat of higher taxes and mixed messages about business policies for this ilk can also create jobs.

I am hopeful that policy makers will ultimately get it right. One thing is for sure the American public will be crying out at the polls in less than 60 days.

Have a great weekend.

~George

In just the first 3 trading days of September the market has almost recovered all of its losses from August. As mentioned in my previous posts, we should continue to anticipate this kind of volatility. My expectations are that this type of market action should occur in an upward bias. Friday’s release of the August jobs report helped fuel this week’s rally by indicating that the private sector added 67,000 jobs which was 23,000 more than economists had forecasted. To see any kind of expansion in private payrolls provides hope that this economy is finding its footing. However, we are going to need to see multiple months of businesses hiring for this perma-bull to become excited about the economic recovery.

As Americans observing this Labor Day weekend, we must implore the leaders of this country to move aside their differences and political agendas. This is critical in order to put into place a real economic expansion plan to help our beloved nation and nations around the world grow again in a meaningful and consistent way.

Happy Labor Day 🙂

~George

Thank goodness last month is over. The S&P 500 lost 4.7% in August its worst drubbing in the month of August since 2001, however this did occur on extremely light volume. That said, a new month and new beginnings are upon us.  With 4 months remaining in the year and uncertainty abound couple that with one of the most important mid-term elections our country has faced in recent history, we should expect significant volatility for the rest of the year.

The market however seemingly is setting up for an upward trajectory. Yes a bullish call from this perma-bull. Let’s take a look – The technicals look poor, the fundamentals are fragile, the sentiment is sour with pessimism peaking  and the headlines are horrific. To me this a recipe that should favor the bulls and as counter-intuitive as it may seem this type of environment historically has been the perfect set-up for a rally, throw the mid-term elections into the mix and it potentially could become a barn burner. Stay tuned and good luck to all.

~George