Why Fed Tapering Talk Should End:
All the talk about the Fed pulling the punch bowl on liquidity is a bit premature. Yes the stock market has been rising without pause for a few months but that doesn’t mean the economy is any more solid than 5 years ago when President Obama first entered the White House with employment levels relatively the same.
The Fed has promised to help keep the economy thriving even after it improves and shows signs of strong employment that won’t turnaround. Clearly the U.S. economy is stalling and the recent jobs number confirms this. Unemployment rose in the month of May 2013 with 175,000 new jobs created. We were certain of our prediction that the numbers would be bullish and our estimate was off by only 1,000.
Asia has bounced back which makes us cautiously constructive in the short run. We told our readers to buy before the unemployment number which paid off and now we are looking carefully at new entry points as we are even more bullish long run based on May 2013 unemployment numbers. This doesn’t mean the market won’t anticipate tapering and could pullback so we are watching technical analysis levels for the major indexes carefully as we look for a new catalyst to move markets. The carry trade, small caps, mid caps and tech remain important and today’s thin trading range is suggestive of a bigger move forthcoming.
U.S. Major Index Statistics For June 10, 2013
DJIA 15,238.59 -9.53 -0.06%
NASDAQ 3,473.77 4.55 0.13%
S&P 500 16,42.81 -0.57 -0.03%