Daily Market Update – June 10, 2014 (9:30 AM)
It’s a Tuesday, so the market is supposed to be going higher, except for the fact that as soon as anyone realizes that such a pattern seems to exist, it begins to break down.
So for the past couple of Tuesdays you wouldn’t have been well served by following that pattern, that like so many doesn’t really have much of a basis in anything logical or rational.
The problem, however, is that while we’ve been talking about that pattern as having been in place for the past couple of months, it actually has many, many years of data behind it lending support to the notion that Tuesdays are far better market days than logic would dictate.
Yesterday was the kind of day that you would have thought would be the logical outcome in a week that really has very little planned news releases or scheduled events. It started quietly in the pre-opening trading and continued that way throughout the session.
Other than the three Federal Reserve Governors that gave talks yesterday and who aren’t generally among the most influential of the various voices, there aren’t even any more such scheduled events the rest of the week to move markets.
While I’m always wary of weeks that have lots of scheduled events I think that I get more concerned with these kind of quiet weeks that almost seem to be a sort of vacuum. While scheduled events can and certainly do move markets, they’re usually nit the catalysts for anything that’s really sustained.
The reason for that is that the market reacts to data, although sometimes the reaction itself is irrational, but the flow of new data immediately changes the mindset. So often you see conflicting data one day after a market mover and the market responds in a completely different direction, as if the previous data had never existed.
However, in a vacuum there is no data, You’re left with your own insecurities and fears and if anything sets off a reaction it can simply feed on itself with nothing of factual basis coming along the way to counteract the fear.
Not that I expect that to be the case this week, because if I did I would have really been stockpiling cash.
Instead, it’s just another reason to be wary of a market that continues to set new highs but does so in a very tentative manner and with very low volume.
I’m still willing to bring cash reserves down a bit but there aren’t too many positions beckoning. With nearly 100 that I follow it is difficult to make a compelling case as frequently as I would like, but it is getting easier and easier to resist the lure of having money in the bank that wants to go out and have a good time.
Someone has to pay the price when that happens on an indiscriminate basis. It’s often hard enough to have to pay the price when everything seems to be well thought out, but add to that giving in to primal needs and you have some major headaches in the making.