Market Direction continues to present to us the same pattern as it has for the past few trading sessions. The market direction opens down and then the dip buyers jump back in and push the market direction higher.
It’s an ongoing test by institutional investors to make sure that there remains support in the markets. Each drop at the outset is being watched and stocks accumulated. Little by little institutional investors including mutual fund investors are placing inflows of capital into the markets. They do this a little at a time so as not to push up stocks. Inflows into mutual funds and institutional investors are back to levels not seen since 2007. I just wonder where they all were when the market had crashed in 2008 to 2009. Actually there were lots of better opportunities to place money in the markets including in 2010, 2011 and even May to June of 2012.
Are things so improved that small investors now want into stocks?
Market Direction and World Bank
The World Bank today downgraded global growth again estimating that 2013 will see 2.4% growth as many nations continue to deleverage their debt loads leading to slower growth. As well the World Bank downgraded emerging markets to 5.5% growth. Emerging markets was always the sector that the World Bank had pegged at 8 % plus annual growth for many years. Not any more.
Market Direction and Europe
Then there is Europe where the stock markets roared ahead last year, providing far greater returns than North American indexes. Auto sales in 2012 were the worst they have been since 1995. Meanwhile Germany has announced they want to “bring their gold home” in a step that will move about 1500 tonnes of gold out of storage from the New York Federal Reserve back to Germany. Germany has advised this is nothing more than a political step which it probably is but it also makes an investor wonder about currency strength.
And then there is Italy where bond yields have plunged and Italy is busy pushing bonds like mad trying to refinance as much debt as possible while bond yields are low.
I am so glad that I believe investing should be done through stock and option strategies and that keeping cash on hand is worthwhile. The world today seems to be somewhat trickier for investing and the lack of transparency among governments and businesses has to be concerning.
Market Direction And The Banks
Both Goldman Sachs and JP Morgan reported big jumps in their profits with Goldman Sachs net profits up to 2.9 billion in the last quarter and JP Morgan profits up 54% to 5.7 billion. The results are important as it reflects on the differences between returns from investment banking and the returns Wells Fargo presented from mortgage lending. Obviously investment banking remains strong.
The impact though on market direction from the bank earnings has remained subdued. Let’s look at the intraday market direction chart.
Market Direction Chart Intraday For Jan 16 2013
Intraday we see the usual pattern of the opening plunge in market direction and the buying begins. There are billions of dollars flowing into mutual funds and institutional investment houses and that money is being placed slowly and carefully. On a good day the Dow can swing 125 points between up and down. Over the last few days it has stayed within about a 60 point range or half the normal movement. This is causing the VIX Index to continue to gradually decline as this slow buying which supports keeping stocks within tight ranges, removes volatility from the markets.
The pattern of higher highs and higher lows is evident again today. At some point the markets will move higher dramatically but not until a lot of the capital that has flowed into the mutual funds and investment houses has been placed.
market direction intraday Jan 16 2013
Market Direction Outlook And Strategy
The market direction outlook for the rest of the day is a repeat performance of the prior days.
The market remains in a bullish stance and I continue to place my capital into Put Selling trades as well and wait for the “big boys” to move the market direction up when they are ready. Next up are earnings from the likes of GE and next week Apple Stock which is having a bit of a relief rally today but which looks weak overall.
Internal Market Direction Links
Understanding Short-Term Signals
Market Direction Candlestick Daily View (Members only)
Market Direction Portfolio Ongoing Trades (Members only)