• Daryn Fleming, Ph.D

The Stock Market Stand Still

The stock market appears to be at a standstill yet again. After the start of the new year the market exploded, taking out the doomers and gloomers of 2018 as it surged back to challenge previous highs. But the market stumbled as February came and went and appears to have run into a brick wall. Let's explore some of the possible reasons.

Many experts on Wall Street believe that the Trump Administration failure to negotiate a deal with North Korea is part of the reason. After a failed February meeting between President Trump and the North Korea leader Kim Jung Un, the market suddenly has another global fear to absorb. That in conjunction with bad economic news out of the European Union makes for a double whammy. To add even more to the worry we have a still unfinished trade negotiation with China. As if these issues aren't enough we now have a Democratic Party in Congress which has launched investigations about President Trump and a renewal of impeachment talk.

So rather than continue our celebration of the arrival of a new year and new economic data that indicates no sign of a recession after all, investors are now talking about the above negative issues. Some pundits are again talking about a possible huge market correction. All of the uncertainty is what causes turmoil and the stumble of markets.

The reality is, anything could happen with all of the various issues. A China trade deal could collapse. North Korea could begin testing missiles and threatening the world again. Europe could go into a recession which could pull the down the global economy. Impeachment proceedings against President Trump could begin. We know that the campaign for the Presidential election of 2020 has already began. The markets do not perform particularly well in Presidential election years.

So what should investors do? That depends entirely on what your time frame is. Longer term investors stay the course. By continuing to load up on shares no matter what price level the indices are at you ensure a long term profit as markets always end up higher over time. Investors with a shorter term time frame will sell everything and just hold cash, waiting for conditions to get better and markets to show signs of a resurgence before they get back in.

Of course very short term day trade investors like me are in and out of the market on a daily basis. We go long and we go short, often during the same day. Our time horizon is a half an hour, not twenty years. Sadly the mainstream business media reports very little information that is useful for day traders who rely exclusively on charts to make investment decisions. So we have to make sure we coach ourselves, stay positive and focused on the mission of generating a daily cash flow. Short term trading is a difficult life, indeed. We have to just keep grinding it out and do the best we can. Happy Investing!


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