Stumbling To A Gain

A nice opening rally almost failed yesterday, as the Federal Reserve’s beige book acknowledged “widespread signs” of a slowing economy. That prompted a mid-day sell off, but the major indexes managed to finish on the plus side.

Not helping matters was President Obama’s announcement that he would let the 2001 and 2003 tax breaks for the affluent expire at the end of the year.

The Fed’s beige book report considered the continued stress in the housing sector a big problem. No surprise there, as the expiration of the tax credit in June prompted a slowdown. Nothing was accomplished with that stimulus plan other than that future demand was brought forward.

On the positive side, Tuesday’s European debt problem seemed to have been contained, at least for the time being, as Portugal and Poland were able sell bonds with lower than expected yields and larger than expected demand.

I believe that the markets will continue to stumble based on news that either is interpreted as good, bad or better than expected with trading in the range remaining a distinct possibility.

About Ulli Niemann

Ulli Niemann is the publisher of "The ETF Bully" and is a Registered Investment Advisor. Learn more
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