Does the Market Have "The Right Stuff"? - Ahead of Wall Street

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Thursday, August 8, 2013

This is Mark Vickery covering for Sheraz Mian today.

Anytime I see things like the S&P 500 power forward strongly up to 1700, only to experience selling-off "turbulence" that's not exactly anticipated but nonetheless quite real, I think of Chuck Yeager from "The Right Stuff," trying to fly that crazy plane into outer space -- at first everything's cool, but as soon as he starts seeing stars, the plane's engine starts to falter. Not that anything in the market is expected to come crashing down to earth these days, but the point is this market turbulence requires cool heads in times of crisis.

And there's really not all that much to have a crisis about -- investors are finally seeing value in the Eurozone following the economic earthquakes in the region over the past couple years, China's trade numbers are looking more stable, and best of all: Initial Jobless Claims are continuing to come down. Yes, this morning's 333K is about 5000 claims more than last week, but our 4-week moving average is now solidly below 350K, which is at least a psychological threshold to have gotten past in order to see economic improvement.

So the market lately has clearly been trying to price in the end of the Fed's Tapering program (where they stop buying back $85 billion a month in asset purchases to keep interest rates down and liquidity in the economy), which many have marked on their calendars for next month. But our memories aren't so short that we can't recall the Sequester and the Payroll Tax increase, and the market managed to navigate through those potholes pretty well, all told. Therefore, how much are we really fearing Tapering, when the economic recovery, while not exactly robust, has proven it can power through such obstacles?

Just look at Tesla's ( TSLA ) earnings blowout this morning -- here's a company that has aggressively filled a void in the market and is now revving past its competition. And this after the stock having blasted off a few months ago to 400% gains from this time last year. It's an excellent example of opportunities existing in the very near future that companies with the vision and means can capitalize on, and Tesla looks to be one of the first to have arrived there. And the market approves, clearly.

So, likely, does the 90-year-old Chuck Yeager. There's nothing like a barrier-breaking American to help our beliefs and confidence soar.

Mark Vickery
Senior Editor



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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks , US Markets

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