Patience is not only a virtue in life but in trading as well. While the markets continue to display little rationale, time after time if given the opportunity many things have a way of working out. Meaning that if you are able to withstand doubt and the burden of an ever-changing bottom line that the knowledge of a particular market or product well enough will justify your outlook many times over.
Gold as of this morning continues to face headwinds. While it has not been a one way drive downwards it has seen a steady decline and as of this writing the precious metal is near 1439.00 USD. The commodity market as a whole has been in decline since February with most metals and grains under pressure. Crude Oil in the short-term has been strong and it has been swimming against the stream. While it remains near the higher realms of its range, economic conditions continue to be rather lackluster globally. Traders may find an opportunity to test the resilience of Crude Oil if they practice patience and solid trading principles without over exposing themselves to the price volatility.
Equity markets worldwide have displayed an ability to climb in the midst of a challenging economic environment but this has more to do with the ability of central banks to create a situation in which other asset classes offer little in the way of opportunity. In the past few days while we have not seen a violent rebellion of philosophy by key players of central banks, we have begun to see a heightened debate about policy and future consequences from some of the actors. Patience and guidance will be rewarded and it would be wise for traders to know that history has a way of creating tidal cycles and currents that are navigable if they read the map well.
Yesterday’s Retail Sales data from the U.S. provided a common thread to what has transpired via economic analysis in the past few years. While the broad Retail Sales figure came in slightly better than expected with a gain of 0.1% and was held up by some as proof that the American consumer has remained consistent and strong, the previous month’s total was actually revised downwards by a staggering minus -0.5% and did not get much mention. Wall Street did turn in a very lackluster day of trading on Monday, but given that the three major indexes have all pressed higher this year, yesterday’s trading cannot be interpreted as a sign that the bull rally has ended. Do not discount the desire of some to deliver the good news from the ‘gain’ in Retail Sales yesterday in order to feed the optimism that is needed to keep Wall Street moving along.
Data from the States will become rather quiet until tomorrow’s Empire State Manufacturing Index is published along with PPI numbers and Industrial Production figures. But do not expect hard data to be the catalyst that turns the stock market into a bastion of doubt. For that to happen fissures among the players who guard the Federal Reserve’s monetary policy will have to become clearer. And Ben Bernanke appears ready to control the stage until he is pulled off of it forcibly and as of yet it doesn’t seem that Philly Fed President Charles Plosser has enough strength to make that happen.
The EUR as of early this morning has pulled itself back from its short-term low water marks. The E.U. and ECB continue to also provide a sense of disintegrating narrative concerning their interpretations of the financial crisis and recession that plagues the continent, but the Single Currency has remained rather steadfast. The confidence game that Mario Draghi has plied has been worth the price of admission for onlookers, but if not for the ability of his counterparts from across the Atlantic to essentially keep the USD weak, the value of the EUR may be a completely different story.
And once again traders must ask themselves about timelines and outlooks. While the E.U. shows little in the way of long-term ability to pull itself out of its economic doldrums it does continue to listlessly breath which gives traders an opportunity to use the ranges within the Single Currency to their advantage. The German ZEW Economic Sentiment reading will be brought forth in a few hours time, but is anyone really paying attention to data from Europe anymore? This question may be asked again tomorrow when France and Germany present their Preliminary GDP results.
Policy coming from politicians and their chosen officers that inhabit government institutions have clearly created an eerie sense of calm among global investors who continue to pursue assets. But for many watching from the audience and listening to the music being created by the financial instruments, it would appear that having witnessed the inability of the ‘great leaders’ to provide insight nearly five years ago just before a rather gruesome economic meltdown, that some in the crowd still fear another implosion and are murmuring about ill winds with the belief that what they are watching will prove an operatic tragedy. And the crowd may prove that they have a better understanding of the opera being performed than the participants who are singing poorly written arias.