Rev Shark:
Come On, Admit It: This Market Looks Good
12/14/04 8:12 AM ET
"It is not work that kills men; it is worry. Work is healthy; you can hardly put more upon a man than he can bear. Worry is the rust upon the blade. It is not the revolution which destroys the machinery but the friction. Fear secretes acids; but love and trust are sweet juices."
-- Henry Ward Beecher
How can we not be at least a little distrustful of a market that has been as strong for as long as this one has? Surely we are due for some major disappointment any time now. These bulls who have been blindly buying as if they didn't have a care in the world are certain to be hit hard by the always cranky Mr. Market.
Given the mediocre economic news, the extended nature of the indices and the long list of other worries and concerns we'd be fools not to worry about this market at least a little. There are plenty of bears out there who are more than happy to point out why this market is going to get smacked hard any time now.
Go ahead and worry a bit. We always have to keep in mind what can go wrong. When we are overconfident and certain that nothing bad can happen to us the gods will certainly find a way to show us the errors of our ways. However, being aware of the negatives and contemplating what can wrong doesn't mean we should be frozen into inaction. Despite all of the legitimate worries the bears keep muttering about, there is some excellent upside action. There are strong pockets of momentum, the S&P 500 has produced a very nice technical breakout and the buyers are showing few signs of quitting.
A little worry is good because it keeps us on our toes but we can't let it weigh on us so much that we don't take action. There will be a time to embrace our concerns about the market but it is premature to do so now. We need to respect what is in front of us, which is some pretty darn healthy action. Worry is not going to make you much money in this market. This is a time for action and there is a strong likelihood it will be that way through the end of the year.
The early action this morning is slightly negative as market participants experience a few jitters in front of the FOMC interest rate decision, due out at 2:15 p.m. EST. A quarter point hike is very widely anticipated and folks will be parsing the accompanying policy statement for clues on the future course of interest rate hikes.
It is unlikely the FOMC will do anything surprising but this is an event that many market participants will play off of, and it can trigger a sharp move. The market is in a position where it will be susceptible to bouts of profit taking but there some dip buyers lurking about under the market.
Overseas markets were slightly higher overnight, crude oil inched up a tad and the dollar was mixed. Trading may be a bit slow in front of the FOMC decision but there is a lot of momentum money sloshing around looking for action and if traders don't find it, they create it.
Gary B. Smith:
