Morning Market Thoughts

by DAN Good morning. We’re setting up for a weak open today, which is consistent with equities hitting resistance. So the battle continues between the bulls and bears.

So the initial jobless claims data released this morning show that initial jobless claims fell by 4,000 to 264,000. In other words, there were 4,000 fewer people this week who heard, “Roscoe, you’re fired. Fill out your COBRA forms and head down to the unemployment office.” But even though this is generally seen as a bullish indicator, it’s time for the indexes to take a breather.

As previously noted, the strength in midcap and smallcap stocks is an indication that investors still have an appetite for stocks. Combine that with the fact that there are few fundamental reasons for the market to move higher, and you’ve got a recipe for…the market to move higher. That’s just the way of the financial markets — they move in ways that seem illogical and confusing. There is a time for aggressive trading…but only when opportunities are evident. We have some good opportunities in energy stocks, metals, industrials, and aerospace stocks. Many are working.

If you want to capitalize on these opportunities, you have to buy them at the right time (near support, in a definable uptrend, showing signs that others are starting to buy, etc) and then have the patience to hold them through the inevitable oscillations each day. Have you ever sold a stock, watched it go another 5% over the next several days or weeks, and then wondered why you sold it when you did? If this has ever happened to you, then you know that patience is a weak link in your chain.

Self-awareness is the first phase of fixing something.

Active traders only — Watch Restoration Hardware (RH) this morning. If fell to all-time lows after a really rough earnings report. It might bounce…and it might not. But it’s not just going to sit there.

Have a great day!

–Dan

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