The funny thing about the stock market this week is that it ended the week virtually unchanged. Of course, it happened to be an incredibly volatile week as well. Historically though, we have seen higher volatility, and we have seen worse down markets.
So what does this all mean going forward. Well, over the weekend, it was reported that the cost of this mortgage bailout is going to be at least $700 billion. Hmmm…do you think there are going to be any tax cuts next year, no matter who is president? If anything, we can probably expect a tax increase before any tax cuts.
Over the next few days and in coming weeks, the market will digest the impact of this past week’s events on the economy. Based upon the reported cost of cleaning up this mess, it is quite possible the impact will be deemed as somewhat negative. What we will need to see is a return to normal trading in terms of volatility and volume, and then ultimately, the market will show its hand in terms of which direction it wants to go.
Pay close attention to the performance of the Dollar and interest rates going forward. If the Dollar can stay within its current uptrend, while interest rates remain favorable, there may be a chance for the economy to still recover. Again, after the election, we enter a seasonably favorable period for the stock market. For now, caution should rule the day.
Good Trading!
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
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