Listen to Yellen, the stock whisperer, & ignore fundamentals: NYSE traderhttp://finance.yahoo.com/news/janet-yellen-stock-whisperer-bull-market-catalyst-all-time-highs-144543855.html#
Were the soothing tones of the stock whisperer the catalyst to propel the market back to the all-time highs?
After
the market rallied from the damage of early 2016, we noted that
equities stalled in mid-March were waiting for a catalyst. The bulls had
clearly reasserted their majority, but just like water, every market
finds its own level of equilibrium, as we've seen the last two weeks.
Change in investor focus
Volumes
had dried up to the point where the market barely budged, and it was
clear that even the machines were taking a break before macroeconomic
data kicked into top gear. Everyone was looking ahead to the employment
situation on April 1, to be followed by first-quarter earnings that
begin on April 11 with Alcoa, and of course, the next FOMC meeting at
the end of April.
Given
the soothing sounds of the stock whisperer—er, Janet Yellen—all that
seems to have changed. If the Russell 2000 (^RUT) can get above
1160-1165 and the S&P 500 (^GSPC) can get and stay above 2080, then the all-time highs could be challenged.
This
turn from indifference to full steam ahead proves yet again that we
should not go against (1) crude oil prices (CLK16.NYM), (2) the Fed (in
particular Janet Yellen), and (3) the VIX (^VIX).Speaking of earnings
As
mentioned, first-quarter earnings season is just around the corner. By
all accounts, Wall Street is expecting dismal reports and
less-than-stellar company outlooks. This will certainly cast a pall over
the buying trend, but will it be enough to strip out the momentum we've
seen since February? That’s doubtful, as the market has been taking its
immediate cues from other places—again, most notably crude oil, the
Fed, and indicators like the VIX.
I
suppose that fundamentals and the cash flow of a company will once
again reign supreme in valuations, but until the market sheds all the
outside influence that has been baked in over the last 7 years, I will
continue to look at the market influences that have little to do with
the operations of a company.
Today's magic numbers
Here
are the magic numbers for moving risk markets: VIX above 20 = sell,
VIX below 14 = buy. Oil below $40 = sell, oil above $40 = buy. Anything
Janet Yellen says.
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