One of the things we talk about in the Investment Survival Workshop is developing the mindset to think ahead. When I first moved out to Park City, Utah from Atlanta, Georgia I was admittedly a bit anxious about the idea of getting up at 5:00AM every day to start researching the stock market. After all, that’s exactly what I was doing back East except it was 7:00AM and I had a full 2 ½ hours before the market opened at 9:30EST.
I did this for some time until I came to the realization that if I was trying to figure out what was happening today, I was already way too late. What was going to happen today already happened early this morning in Europe or even earlier in Asia. Maybe it was just a form of rationalization but if you are trying to figure out what is going to happen today, you are late to the game. You have to develop a mindset of thinking about something other than today. Now that will vary for everyone. I mean if you look at this as a mental exercise, much like physical exercise, are you training for a half marathon, a 5k walk fund-raiser ,or just to be more fit for your family and fun?
The point being is that when you have a regular exercise routine, you have goals in mind. When you are planning an investment strategy, it’s no different. What’s your time period? Are you a long-term investor or someone who is just trading week to week or even a day trader? As part of a routine, find time to anticipate what’s going to happen for some period in the future.Everyone’s time frame will be different. With that in mind, here are a few of my ideas for the following week, beginning May 20th.
Not necessarily in alphabetical order:
Monday May 20th Chicago National Activity Index. Market participants will look at this clue in the economic puzzle and derive no direction. Basically a quiet day in the market. I can’t think of a thing that will happen Monday that will amount to squat.
Tuesday May 21: Lots of talking Fed heads: More hawkish Bullard speaks in Frankfurt US and Dudley speaks in New York. Let’s hope they keep their thoughts and sayings vague and cryptic as central bankers are prone to do.
Wednesday May 22nd Bernanke testifies on the economic outlook and Fed releases minutes from April 30-May 1st FOMC.
As Warren Buffett was quoted on CNBC a couple of weeks ago, that when the Fed takes it’s pedal off the gas, it’s going to be the short heard around the world. The bond market as represented by the 30 yr. Treasury bond futures has been on a steady decline (rates rise bonds decline) since May 20th.Wednesday is set to be a high impact day this week.
Also oil inventories at Cushing are announced. This weekly indicator is not much good for trading more than a few minutes of oil futures. Are we developing an oil glut in this country. Not likely as it’s too darn expensive to drill for oil but I still expect WTI to be under pressure. Commodity related oil and gas stocks have been relative poor performers. Any change in sentiment about the developing oil glut in this country could ignite this moribund group.
Thursday May 23rd undoubtedly the most anxious day in the market this week. U.S initial jobless claims will be closely watched as for clues on the future of employment in the U.S. According to Reuters Sunday May 19th ” The beginning of the end of the Federal Reserve’s massive bond-buying program might come sooner than many investors think if recent gains in the U.S. labor market do not prove fleeting.
Much will depend on how economic data, which has given mixed signals for growth prospects, develops over the next few months. Reports on job growth in particular will go a long way in helping Fed officials determine whether the time is right to trim the pace of their $85 billion in monthly purchases.”
New home sales are set to be released with improved expectations for starts to 425k. Existing home sales not normally a big deal are increasingly important as this is the most likely industry to pick up labor slack. If it doesn’t happen from housing starts it’s not going to happen IMHO.
Natural gas storage figures set to be released. Natural gas has rallied 20% this past year. I expect this commodity to strengthen as more and more capital drilling programs are switched to NGL and oily versus dry gas.
via Job market gains could lead Fed to taper QE3 early | Reuters.
Friday May 24th
German Dross Domestic Demand. The whole Euro austerity Austrian thinking versus prime the pump American Keynesian worldview will be full on display Friday. Expect the U.S version to trump German prudence. Print Print Print is what the doctor ordered. U.S durable good orders might not show much triumph though.What is beginning to worry me is the rise of the US dollar and the impact it will have on U.S. multinationals like P&G and the price of oil quoted in U.S. dollars. What kind of advantage does Toyota have now over Ford with the plummeting yen? Will the Chinese allow this devaluation of the Japanese yen to go on? How about Hyundai in South Korea
So far so good. Monday was nothing much in the way of direction as we expected. More of the same on Tuesday with a little more volatility as the Congress hammers Apple and Fed Governors move markets.