The current jobs number was lackluster. There was a major revision down on the July employment number from 162,000 to 104,000. The implementation of Obamacare is likely slowing the pace of hiring. Fourth quarter earnings estimates are being revised down. Syria remains open ended. The Federal government has yet to engage in its debt ceiling negotiation. But, the economy continues to grow slowly, European economies are coming out of recession, China has stabilized and the Fed remains accommodative. The relative outperformance of the NASDAQ and small cap Russell 2000 index (IWM) and rising 10-year Treasury yields suggest the risk-on trade remains in place.
The Delta MSI is essentially neutral at 50.2%. Owning stocks when the MSI is near 50% is often emotionally difficult. All of us have a heightened sensitivity to potential loss. The important consideration is to remember that the objective is to avoid the major down moves and catch the major up moves. Don’t let daily volatility distract you from this mission.
Money that is currently invested in equities, keep invested in equities. Money that is designated to be invested in equities, hold off for now. Markets correct either through time or through depreciating price action. The current situation so far is characterized by a market trading sideways allowing uncertainty to be resolved through time. Every week brings greater clarity on the emerging trend.