Warning: potential Boredom Alert! If you want to skip the details, scroll to the last paragraph.
So last week was not was not good for the markets as they were down over 1%, and now we have Friday’s non-farms payroll report which showed that 120K jobs were added in March vs. the 200K expectation. As of this writing on Monday morning, today the Dow and the S&P are both down over 1%.
While the unemployment rate did move down to 8.2%, the weakness in the non-farms payroll report will force the markets to continue last week’s selling. Earnings reports start this week, as do several Fed speeches and reports, so there are plenty of things to focus on over the next few days.
Regarding earnings, tomorrow Alcoa kicks things off, and their report will help move the markets on Wednesday. Thursday, Google is sure to have a sizeable impact on Friday’s move along with Friday’s morning reports from JPMorgan Chase and Wells Fargo. Remember, it’s not whether or not they do well, it’s if they do better or worse than analysts’ expectations.
Next, we look to Europe; strength there would relieve pressure on US markets. Significant reports for Europe this week are: Tuesday’s German Trade Balance and the EuroZone Sentix Investor Confidence, Thursday’s European Central Bank report, and Friday’s consumer price index report for Germany.
Lastly, the Fed’s Beige Book comes out on Wednesday, and Bernanke has speeches on Monday and Friday which are sure to have something in them which, as usual, will cause some turmoil one way or the other.
The bottom line is that the weakness of last week will continue into the early part of this week, but there are chances for the market to rise again. Odds are, though, that we are entering a weak period right now. As always, remember that’s it’s not timing the market, but time in the market that counts. Psychologists will tell you that immediate reinforcement is superior to delayed reinforcement, meaning that we are generally satisfied to see the market go up in the days following a purchase (or down following a sale), regardless of the long-term potential. Based on that, if you had a pile of cash waiting to enter, I’d love to tell you the perfect time to invest when the market was going to go up the next day, but in the end I’d have to say that the time to invest for the long-term is always now. If your objective is aggressive-growth, rebalancing will take care of the ebbs and flows of the market. If your objective is income, you will be much better served in bonds now than waiting around for higher yields and getting the basically 0% return on your cash.
Have a great week!