Top Line: With options' expiration behind us, the stock market should be free to trade with some normalcy...ok, maybe with the Fed's announcement on Wednesday the market still can be a little temperamental.
The market has had a pretty good September and it seems that we have been waiting and waiting for a break. Our position is that as the market goes up, we think it is becoming more and more dangerous. Meanwhile, there seems to be some complacency and outright bullishness.
We see that the overnight markets are a little skittish with the stock futures down just a little and gold down about $6. There are so many reasons for the market to go down but as long as it is continuing its run we have to respect it. Pullbacks have been opportunities to buy, not the start of a down move. With this uptrend in place, it does have an end and we will be waiting to see the trend switch from up to down.
With that in mind, we remind you that we are still looking for some more upside but we can not be Sure about that. We are pretty sure but, with stocks in a more and more precarious position, this could be the actual top. That is why we are so cautious and getting more cautious by the day.
As for the Fed, we think they don't carry the same weight as they once did. With short term rates virtually zero, what can they say to move the market? We don't think there is anything they can say. The market has given them the benefit of the doubt as to whether their money policies are the right thing to do or not. Only time will tell but the market seems to believe that what they are doing is ok.
We will reassess after the Fed's announcement on Wednesday.