Sometimes There's Just Not Much To Say

I don't have much to add today to the investment matrix except to note the meandering activity of the major indices.  These have all flirted recently with their old highs, only to be repelled time after time  at resistance.   Just last week US markets looked poised to test these old highs and potentially break ou.  What followed was a nasty two day sell-off, although most of that as we discussed on Friday had to do with what was happening overseas.  Stocks yesterday rallied hard, almost as if Friday hadn't occurred.  They started strong out of the gate this morning but then seem to have lost their steam as of this writing.

For whatever reason, whether it be higher valuations, tepid economic growth, fear of rising interest rates, lower corporate earnings so far this year or a combination of the above, stocks in the main don't seem to want to move higher right now.  Yet, so far in 2015, each sell-off we've seen has been met with buyers at lower levels.  Probability suggests that activity will continue until the dip buyers aren't rewarded for that activity.

I'm not sure any of us knows what this means.  Some see a major topping action in the markets.  Economic activity seems too strong for that from the numbers we've seen.  Growth is tepid but growth is there so far and as long as the economy expands it has historically been supportive of stocks.  By that I mean we might see a correction at some point but that correction is not likely the stuff that a bear market is made of given our current level of economic activity.

Others see a pause as markets digest the last two years of gains and they work off the heady valuation levels we've seen.  I'm a bit more in this camp for the economic reasons sited above.  But I'll add a few things to chew on when we think about stocks going forward, and by going forward I mean the coming six months or so.

One is that we don't know how the Greek problem is going to play out in Europe.  There's a higher probability today that Greece exits the Euro in some form.  Investors aren't as concerned about the same kind of contagion from that as they perhaps were a few years ago.  But nobody really knows how that will play out if the event occurs.  The other is that the middle-east and parts of arabic northern Africa continue their descent into another level of hell.  It seems half of the mid-east and northern Africa wants to leave and get to Europe and the other half is pushing them along via guns or starvation.  That problem is only going to get worse as is the potential there for some flash-point to erupt into something larger.  In particular right now I'd point to Yemen.  Then there's the little problem in Ukraine which continues to fester away.  Summer is coming there and with it the likely potential for more fighting.

Speaking of summer, I'd remind you that the next six months are historically and statistically the weakest in terms of stock market performance.  We've discussed market seasonality before.  See here.  Probability suggests if we are going to have a correction then this is the most likely time for it to occur.  We make no predictions right now in that regard.  We just let our indicators be our guide.

Right now I don't really have much to say in regards to the markets.  I find that most everything out there is a rehash of the same things.  One can only talk about the Greeks, market valuations etc so many times.  I have a bit of business to catch up with tomorrow and Thursday so posting may be a bit light.  I know for sure I'm out tomorrow unless something comes over the transom.  Thursday's a wildcard.  Back for sure with something at the end of the week.