Thoughts {08.14.15}

A few observations before the open.

Stock futures are showing slight losses as the markets prepare to open. Assuming we see no acceleration of these declines as the day passes on, then markets will end the week more or less unchanged.   

Folks have asked me if I'm more bearish now than I was a few months ago.  The short answer is no. A slightly longer answer is that I am a bit more cautious in the near term.  Much of this has to do with seasonal patterns than anything I'm seeing in the economy.  August to October is historically a period of seasonal weakness and the Chinese news this week gave those who want an excuse to be more bearish a reason to do so.  That's my base thought.  We've been going through a correction of time in terms of markets this year and it's possible we could see some correction of price in the next few months.  Absent that, the longer term economic news to us seems supportive for us to think that the bull market will remain intact.  If that changes then so will our view of the market's ability to continue its advance.

The folks I know in Rhode Island who work in the investment business are predominately bearish. That, over the years, has been a pretty decent contrarian indicator as to how the year will end.

Finally an interesting divergence that bears watching.  Oil as a commodity continues to slip in price but the energy related ETFs all seem to have put in some sort of bottoms on their charts over a week ago.  They have for the most part moved higher in price since then.  Most were higher even into the global shellacking that stocks saw earlier in the week.  This may be nothing more than a dead cat bounce in these stocks and this is certainly not a recommendation to buy or trade these names.  It is, however, something that bears watching to see if that trend continues going forward.  

Back some time next week.

*Long ETFs related to China in certain foreign and personal accounts.  Chinese stocks are also held in various foreign related ETFs we hold in client and personal accounts.  Long ETFs related to the energy in both client and personal accounts. Note that these positions can change at any time without notice to our readers.