I know I have been so MIA this past month but between finals and the holidays I took a little break. I will begin updating both my blog and twitter more frequently.
Today I will be updating on some market trends.
In the next week or so I will update you with my positions.
I am so glad that Fiscal Cliff is all figured out. In the midst of the new agreement the Fed indicated that they were going to slow down their efforts to stimulate the economy. This sent most broad indexes in the red for the day.
What do I mean by "slowing down efforts to stimulate the economy"?
When the Fed decides to stop stimulating (injecting more money into the economy by buying bonds) that usually means that consumers and business are only left to each other to buy and sell on the market and a lot of people fear that we are not stable to produce growth.
This information effects the market in more ways than one.
1. Effects economic growth sensitive equities (for example technology)
2. Effects commodities
Commodities: Commodities are gold, crude oil, soybeans, corn and various raw materials.
Why are they effected by the news?
Slowing down the stimulus -> slowing down the economy -> slowing down the use/need of oil
In one of my previous blogs I mentioned how crude oil will show trends in the market. When there is an idea of the economy slowing down the prices for crude oil are going to drop because there will be less demand (people are pinching their pennies)
But there is in fact a light at the end of the tunnel.
Despite ending in the red zone on Thursday stocks ended higher on Friday.
What happened in those 24 hours?
Unemployment numbers! 155,000 jobs were added and unemployment met most predictions at 7.8%
How do unemployment numbers effect the market?
- When they are lower than predicted that usually means you will see some red at the end of the day, less jobs were added-> less people making money-> slow economy
- Expectations are met indexes will be in the green. There were the jobs we expected-> expected level of consumers-> expected economy
- Expectations exceed predictions indexes and crude will end in the green. There were MORE jobs-> MORE consumers-> better economy. woohoo!
Crude oil closed at .2% while Gold closed at -1.5%
The S & P was the standout index ending with a 5 year high!
Financial stocks led while tech weren't so lucky.
When looking at different stocks they effect different indexes. Since tech stocks slowed that will effect the NASDAQ which includes mostly tech stocks.
Funny how different two days can be!
To buy: looking at Google (as always) I know I seem partial but we see good performance from Google however Google is looking a little rich (as in expensive) at these levels, I'll be looking to buy on a pullback (when there is a price drop). Also apple and BP. I'll let you know of any buys!
Let me know if you have any questions!
Brit
