“Based on my own personal experience – both as an investor in recent years and an expert witness in years past – rarely do more than three or four variables really count. Everything else is noise.”
The summer haze is taking its time in clearing. Volumes remain lower than normal and air pockets are evident as seen yesterday and on Friday. The “concerns” are flying in the headlines as we go from one problem to another. The milli-second that the inflation data came in lighter than expected, overnight retail sales data from China came in very light as well.
This morning, bright and early, the headlines were filled with the “Slowdown in China” and any stock selling anything retail in China is getting shellacked today. Classic examples of the mental mayhem which takes place as markets wait for the real data that moves elements along.
There, I am afraid we will watch these antics until we get to the later stages of September and early October. Then, we will have set the stage exactly as a long-term investor would prefer it: kicking off the next earnings season with very low expectations and concerns about the ability to continue forward. This tends to be vastly better than rallying with excitement into the opening days of Q3 reports.
As we covered throughout summer, trade ranges serve a purpose. They build a foundation for what’s next. The longer they last and get tested, the better the breakout is afterward. This summer, while no significant “swoon” was forced upon us, the internal churn was evident for anyone watching.