It All Comes Down To Patience
Given the myriad of complexity that makes up the global markets and their minute by minute direction. I find it funny that this week it all boils down to one word: “Patience”.
The FOMC are getting ready for another meeting to decide simply whether to include or disband with the word “patience” in their statement on Wednesday to the waiting world financial press. The Federal Reserve has created a mountain of debt that they are slowly trying to control, hoping that the slow moving economy can soon stand on its own two feet and allow the debt burden to be gradually reduced. They are this week tasked again to use very carefully chosen words so not to spook the financial system they have sought to save.
Therefore, on Wednesday, the trading world will be looking to hear the word “patience” in their statement. If it is not there I would expect a sizeable sell off. If it is there, we may get beyond the possibility of a lower high on the S&P 500 and shoot back towards a new all-time high.
Currently my system is keeping me out of today’s move back up from last week’s low. So I have no choice but to remain patient myself. Only time will tell if I am missing out or if the system is rightfully protecting me from further downside should a short term lower high be put in this week. It can be difficult having patience, sitting on the sidelines, especially when you see a good rally come and go. However, too many times has my patience been rewarded to concern myself with any short-term moves. And as stated in the quote above, patience is bitter, but its fruit is sweet!
As always, I will remain a humble servant to the market taking only what it will give me and waiting patiently for my opportunities.
Market News:
U.S. stocks closed more than 1 percent higher on Monday as investors cheered a pause in the dollar rally and eyed renewed weakness in oil prices ahead of Wednesday’s key Fed meeting.
The U.S. dollar index fell nearly 1 percent on Monday to trade below 100. The index gained nearly 3 percent in the last week as the euro dipped to 12-year lows below $1.05.
The Dow Jones industrial average gained more than 225 points, with all the major indices advancing to hold in the black for the year.
The Federal Open Market Committee holds its March meeting over the next two days, with the release of its statement on Wednesday. Investors are watching to see if the key word “patient” remains in the statement, an indication of when short-term interest rates might go up
Central bank policies continue to diverge from the United States’, with China’s Premier Li Keqiang suggesting more stimulus in the region and the launch of quantitative easing in the European Union last week. Shanghai equities surged to five-year highs and the DAX hit a record on Monday.
U.S. stocks mostly sold off last week amid more than 1 percent swings as investors weighed the implications on an interest rate hike from the dollar surge and mixed economic data.
However, many analysts were surprised that the fear gauge, the CBOE volatility index (VIX), remained near 16, below the expected 19 to 20 range.
In the lull before companies begin reporting first-quarter earnings in mid-April, few firms post results this week. Economic data is also light.
Home builder confidence fell two points to 53 in March, down from a high of 59 last September.
Before the bell, the Empire State Index posted 6.90 for March, below February’s 7.78. Industrial production rose 0.1 percent in February, below expectations, with capacity utilization slightly lower at 78.9 percent.
Tuesday:
Earnings: Burlington Stores, DSW, FactSet, Adobe Systems, Oracle
FOMC meeting begins
8:30 am: Housing starts