Calm Before the Storm

Sitting here on a Saturday, anticipating a hurricane. No, really. There's a hurricane - Henri - making its way up the East Coast. It should hit sometime later on Sunday.

We don't get direct hits often here. But we will now. And it's still early in the season. 

While the current track projects a landing farther East from where I sit, we're still prepping. At the least we should see high winds and lots of rain. So battening down loose items makes sense. 

We don't really get floods in our specific location, but not far away folks do. And with wind, you never know whether the power will go out - despite it being a rare thing around here.

One of our kids, on the other hand, lives East of here - right in the hurricanes projected paths. He called last night to ask if he, his wife and two kids could drive here if their power gets knocked out. The local Utility company announced yesterday they were confident they could restore any lost power within - get this - 7 to 10 days...and they announced it like it was good news! Having two little tykes with now power for that stretch is no day at the beach. So they may wind up here.

As my wife said, "We'll have fun." 

This calm before the storm thing may be a good way to describe the stock market. It's been hiked up for so long, it's hard to keep saying that a correction is due - maybe a big one. So we won't say it. But...

One thing you can see, whether you expect a storm or not is the calm. Each time the major stock averages (Dow, S&P, NASDAQ) have fallen, buyers but the dip. So any storm quickly returns to calm. 

But, as we've pointed out, other averages, like the Russell (small stocks), the Transports, and the VALUG have diverged dramatically in recent weeks. That's something like the warnings the weather services give so we all get a heads up if there's some chance a developing storm may arrive in coming days.

Meanwhile, the news showed folks out in Long Island hanging out at the beach - lots of them. I suppose they're getting in a few rays, maybe a quick dip, before things get out of control. Is that what stock buyers are doing now? Are they just trying to get in a few pop-up points in before the trouble starts?

So calm has it been that even the Fed's announcement that they're looking to taper, possibly before year-end, didn't really have much impact. The market dipped for a day, before buyers stepped in. You'd think talk of taper would spook stocks, as it has in the past. But no.

As I watch all this, I keep in mind the word "distribution." In stock market parlance, it means that big smart investors do all they can to manipulate prices in the major averages up to create the desire to buy by less smart investors - especially smaller retail individuals. As prices relentlessly grind higher, the stronger smarter hands sell to the smaller weaker ones. 

If you want to be on the receiving end of distribution, be my guest.

With the hurricane on its way, it's time to scope out what needs to be done before it hits. One thing we won't do is run out for food. We make it our business to be stocked up these days, hurricane or no hurricane. With the various shortages we've seen in recent months, we try not to leave things to chance.

It brings up the whole subject of being prepared - all the time. But that's a subject for another day.

For now, batten down the hatches!