Tired of This Market?

11/23/2011 6:30 am EST


Jim Jubak

Founder and Editor, JubakPicks.com

Euro crisis, good news, bad news…when will it end? So wonders MoneyShow’s Jim Jubak. But his outlook for the coming weeks suggests that the volatility is likely to continue.

Tired of the market? You know, one day you were going, “Yay, holiday shopping is going to be good,” so the market goes up. The next day we’re saying, “Oh my God, there’s no end to the Euro debt crisis," so we’re down.

The markets are rallying off the bottom, and then we get an announcement from Fitch saying, “Hey, you know what? US banks have exposure to Europe.” Gee, golly, gee, no one knew that before. Then the market goes down again.

I mean, we’re beyond head spinning. We’re into Linda Blair vomiting up pea soup territory here.

The problem, I think, is that if you look at the next two weeks—say the last two weeks of November—I’m sorry, things look like they’re either going to stay the same or maybe even get worse.

We’re going to have political progress in Europe from the Italians and the Greeks, but the bond markets really don’t care about that anymore. They basically now care about, well is there anybody on the other end who might actually buy an Italian or a Spanish bond, and if there’s not—and right now there isn’t—that means we can sell things down and make money by selling things, make money by going short on these markets without any risks, so we’re going to keep doing that until somebody stops us across the wrist and says, “Aha! You can still lose money.”

That has nothing to do with politics. That has to do with the European Central Bank.

Then back on the US front, we’ve got, you know what? The US government meets another one of those funding deadlines. Since there is no budget, they had until November 18 to pass something that would let the US government continue to function, and then on the 23rd, we’re supposed to get some kind of report out of the supercommittee that’s supposed to be reducing the US budget deficit.

Pretty clear that we’re not going to get anything meaningful. The issue is whether they can even find some way to dress it up and kick the can down the road so it doesn’t really look as terrible as it really is…but you’ve got all this uncertainty floating around. I really can’t see any kind of white horse or good event on the horizon.

So, you’re going to have day to day bounces—you may get something that says, “Oh, earnings from Target (TGT) or retail sales from Target are up,” and everybody gets excited again. And then we get smashed down.

So, we’re going to get this same kind of volatility with, I think, the market probably going nowhere on the upside, maybe drifting back down toward the bottom. Remember, I think we were in a trading range of 1,215 to 1,295 on the S&P, and we seem to be not going to make 1,295. We’re, in fact, headed in the other direction. So, I think that’s what we’re looking at.

A lot of volatility within a narrow trading range really doesn’t mean much of anything, except that, well, we’ve got these big problems, and no one is stepping forward to solve them. So, we’re going to bat back and forth as we wait for some kind of solution or good news-bad news. Something to give us a trend.

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