Last week was no fun as the S&P 500 stock index dropped 2 1/2% moving through the support level just below 4200.
The next support level is 3900.
We have a range between 3600 and 4600 and it is not easy to predict which direction this market is headed.
It seems to me that even good if not great earnings reports are being punished.
You only had to look at Amazon last week.
It just appears that the market has gotten tired and the multiples for price to earnings have gotten too steep.
Moreover, the Fed will not help with absurdly low interest rates.
Simply said, the easy money is not available.
This does not mean that this market is headed for bearish territory.
The talk of recession has grown silent and economic measures are far from disaster warnings.
That is not to say that all is well with such a large debt to service.
I see this week as the point where we turn this boat around.
We have seen October, in the past, be a point for consolidation and then a springboard for the last quarter.
Even though most of the news is disconcerting, this economy continues to make progress.
Almost every measure has come in showing stable if not improvement.
That is not to ignore what is happening around us.
It does seem the more we worry, the more we lose focus.
I chose last week to take a good portion of my cash and invest in 6-month Treasuries paying 5.5%.
The real conundrum is whether rates have peaked and one should look long term to the 10s of year.
I forecasted 6%, but not so sure we will make it that high.
I have a feeling the Fed will sit on their hands for a while.
On the other hand, we are not at 2% CPI and I don’t see that coming anytime soon.
I am still looking for value and have in my sights certain financials like Keycorp, Truist Financial, Comerica and Citizens Financial.
In the Real Estate Investment Trust sector, I am evaluating Boston Properties and Simon Properties.
As is the case in value investing, you won’t find many advocating for these sectors.
In a week to be spooked, I look beyond the ghosts and goblins.
We have had a settlement of the UAW strikes, the Fed should be punting down the road and we finally have a new Speaker so all is not that bad.
Maybe we should put our fear on the back burner after Tuesday and embrace the optimism of the Holiday season.
At this point, I will take steady as it goes for a while. The turbulence was affecting my stomach.
