Saturday, December 05, 2015

A Confusing Market

I did not expect the market to rally Friday after the jobs report, especially since the jobs number indicated the Fed is raising rates in December.   In addition, the ECB said that they would continue monetary easing in the EU.  So I expected the stock market to decline, especially interest rate sensitive stocks, dollar to rise, and gold to fall.

Instead the market rallied, dollar went down, and gold rose.   The market not only rallied, but it went up over 2% and recovering the losses from the previous day.   The main negative sector was energy, due to the OPEC deciding to continue their policy of not reducing oil shipments.

While confused, I am very happy with the outcome.   Our accounts were up and my company stocked (uncharacteristically) gained a little more than the market indices.

However, the market reaction has me questioning the sustainability of this rally. The market can't keep rising if interest rates are going to rise.     If I'm right, the next few weeks/months should be the beginning of a market correction.

For more on Reflections and Musings, check back every Saturday for a new segment.

This is not financial advice. Please consult a professional advisor.

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