So you as a trader have woken up from your self-imposed slumber since 2008 and find yourself looking at numbers from Wall Street that seem to indicate the masses once again have piled into equities. You see jobless levels are supposedly improving in the States and know a Non-Farm Employment Change number will be presented today and a result of 162K is the expectation. What do you do? Do you start to go into the stock market and join this feeding frenzy or do you ask why the frenzy is occurring. Well, it depends likely on the type of trading you are planning.
There should be little doubt that if you are a long-term investor looking for value in the equity market within established companies that you can find value. Digital Markets Advisor does not find itself betting against Warren Buffet’s trading philosophy. However, if you are a short-term investor merely looking for a good trend and fast profits you better be nimble enough to get out quickly. The markets are near highs among the equity indexes and the sound that is being heard in the background may be a vacuum sucking people into the next big bubble in our opinion. Digital Markets Advisor believes strongly that this feeding frenzy has been spurred on largely by Central Banks.
The ECB kept its interest rates in place yesterday regarding monetary policy. But Italy certainly looms and the political crisis that is unfolding in the nation is not about to disappear. The EUR has traded upwards since yesterday’s press conference with Mario Draghi at the helm of the ECB podium as the central bank’s confidence game tries desperately to maintain its poise.
Gold continues to consolidate in a rather low valued mode. As of this morning the precious metal is near 1576.00 USD. Crude Oil in the meantime continues to test its short-term lows which is more than interesting considering that Wall Street is doing so well. The question is what type of demand is really in effect for commodities at this juncture. And if looked at since August, price levels per physical resources have traded in a fairly tidy range.
The jobless numbers today from the States will be at the top of the news cycle, that is if you are not paying attention to the news that Hugo Chavez will be embalmed like Lenin and preserved for posterity so the masses can continuously pay their respects to the ‘great’ leader. Also North Korea has apparently canceled its non-aggression pact with South Korea as of this morning. However, we do not think a nuclear war will start and apparently most Asian traders feel the same way because nearly all of the Asian bourses have done well.
Traders should pay attention to the Non-Farm Employment Change numbers later today. Wall Street has been a catalyst for global equity markets in recent days and investors have a reason for being cautious in the midst this frenzy as the major indexes have extended their gains. It is all about having poise within the marketplace.