Thoughts {09.11.15}

Markets seem to be trying to scratch out a bottom.  If we ended the day trading where we are about now then the major indices would be up for the week.  Investors seem to be frozen right now, waiting on next week's Federal Reserve meeting on interest rates.  This decision seems to be all anybody has been able to talk about in the financial press for the past few months.  Personally I'm tired of it and can't believe a 1/4 point raise is going to derail the economy.

And speaking of the economy, I noticed this last week over at Barry Ritholtz's blog and wanted to pass it along. It's a pretty succinct look at what's going right with the US economy, although you wouldn't know most of this by reading most of the press.  Remember our mantra for the past several years has been that things are getting better here i the US.  The economist, Jim Smith, thinks the Fed ought to raise rates it seems based on the data:

"If you read The Wall Street Journal, you would never know about the record-breaking results for all measures of corporate profits. You would certainly not realize that, after several previous records that have all been revised away, we finally saw a record for real disposable personal income set in July. That is huge and it should last this time, as the data have been creeping steadily toward this record for some time. What all this means is that when the FOMC meets on September 16 and 17, they will be looking at a US economy in which more people are employed than ever before, earning more money than ever before, producing more goods and services than ever before, and with personal consumption expenditures and corporate profits at the highest levels ever seen. If that is not a prescription for finally raising the Fed Funds rate, then I can’t imagine what it would take to get them to move."

Back to stocks.  While markets seem to be trying to find their lows, probability suggests at least a 50% possibility of a retest.  We also have moved off the most extreme of our oversold readings.  Interesting to me that stocks never got so deeply oversold by our indicators as we've seen in the past, even during this bull market.  That's another reason to at least entertain the possibility that we might see a retest at some point.

Finally I pointed out in a post on July 30th that it has been my historic observation from years traveling to Rhode Island that the summer is basically dreck for stocks.  I took a look at the markets going back to 1983 when I first started vacationing out east and found out that the S&P 500 had returned -.72% during that period that I defined as the end of May till the end of July.  This year was more of the same, albeit with a worse return.  The S&P 500 as represented by its ETF SPY was down -6.37% this year during that period.  I haven't updated the long term averages but I'll give you those results at some other point.  

Finally this is the anniversary of the 9/11/2001 events.  We will not spend a lot of time dwelling on that day, although it remains etched in our minds like it occurred yesterday.  Others can do a much better job of that, particularly those that were closest to the events.  Suffice it to say to all the victims and their families that they remain in the nation's thoughts and prayers today.  God Bless.

Back Tuesday next week.