Waiting for a Rally

The past several weeks have made for an interesting environment to trade in. One week the world is scared and ready to jump every time a tree brushes up against the window. On the other hand, another week we will have a relief rally; in this instance, it wasn't actually a rally as we didn't really go anywhere. But if you paid any attention to the media that week, you'd have thought otherwise.

Mostly it's been very slow going. The metals and mining sectors, while still strong (especially given Alcoa's better-than-expected earnings yesterday) was very volatile and are at, or lower than, their February/March lows. Will China crash, trying to slow down their economy but accidentally lend a hand leading the rest of the World back in to recession? That was the story. What seems to be reality remains the same as it has been for the past decade: China is Hungry for commodities, and eventually they would love to be able to pay for them in their own currency.

While the rest of the market did nothing, or fell a little bit, (on extremely low volume) Gold skyrocketed. It was not just commodities that were held as extremely volatile recently, all stocks, perhaps owing to the increasing correlation of all stocks to move along with the general markets, were considered slightly perilous. It being the end of the quarter, no hedge fund seemed to touch anything with a ten foot pole. Thus, retail investors, the paranoid type, and all the Johnny-Come-Lately's piled in, driving the price of Gold up to around $1275. It then fell abruptly as safety appeared to creep its way back from no man's land.

The heart of the matter, frankly, is that folks are worried about Global Growth and a "double-dip" recession. Not being old enough to have any clue what a "double-dip" is, the idea has piqued my interest. In all markets, pauses follow moves, and it is quite healthy for markets to pull back or correct themselves. But the pundits constantly spout things like: The Health Care Bill will increase taxes and lead to negative output. As if austerity measures aren't the pot calling the kettle black. Other things we constantly hear: government debt in Greece, Europe and the U.S. My opinion? Get growth and the deficit will magically reduce itself! But anyway, the markets are really doing nothing, but mass media and the 24-hour news cycle freak everyone out, and the market won't make up its mind which direction it wants to go.

If, and when it breaks 1080 (the S&P), I think a move to the upside is waiting to happen. The question is, will it be during or after earnings.