swing

It’s hard to feel good about the equities market headed into Monday after Ben’s confidence spanking late in the afternoon on Friday. Where are we going from here? No QE3…? Is it possible that we’ll actually have to value the market for what it is instead of being artificially propped up by the printing press? It looks that way and that makes investors nervous. I won’t begin to try and predict the direction from here, but uncertainty rules the short term direction and right now, if not right out troubled. That, on the surface, points to a lower push in the near term.

However, there is a lot of economic data out this week, especially pertaining to the consumer, that could show some hidden strength.  On the other hand, if the consumer doesn’t look good (consumer spending is 70% of GDP), then I would expect the markets to push to new lows with high volatility baked in. We have not seen large panic selling to this point, but it feels like we’re on the edge and it’s as if though we’re just waiting for the right catalyst to show a major sell-off. For now, however, the options market shows there are still some traders betting long and until the VIX shoots back up above 23.5, we’re not really in an ‘unload the longs’ environment. Right now, we’re torn. The market is nervous, but the value trader is still picking up what they think are bargains.

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