There is positive action in the premarket here on Friday as we await economic news at 8:30 a.m. ET. Personal income and spending data will be announced, but the most important report will be Personal Consumption Expenditures. PCE has a different weighting than the Consumer Price Index (CPI) and is more focused on what businesses are buying rather than consumers.
The market consistently has been optimistic in front of important data and Fed meetings recently, only to be disappointed. We have a little optimism again this morning, which is understandable as the failure of Wednesday's bounce has left the indexes oversold.
We will have reaction to the data this morning, and it also is the end of the third quarter, which may trigger positioning moves by big funds. However, the overall technical picture is extremely poor. Traders have little choice but to keep hoping to catch a counter-trend move, but even the optimists are dropping their predictions of a significant market bottom.
We are mired in a miserable bear market, and no one knows how much longer it will continue. There are hope-filled bulls who think that things can't get much worse and that a turn is coming soon, and there are pessimistic bears who believe this difficult market may continue for many months as we head into a recession in 2023.
Much of what we read about the market is based on various views and forecasts. You can find equally convincing arguments for just about every scenario, but the only thing that really matters is the price action.
Rather than play the prediction game, I embrace the idea that I have no idea what will happen. I can maneuver through short-term action and maybe knock out a few good trades, but it is ludicrous to think about what might happen in a month or two. I figure if I just deal with today, then I'll be fine when conditions evolve and eventually improve
My current view of the market is that there is a very high risk that it will go lower, and if there is a bounce or uptrend, it can't be trusted to last long.
We will have volatility today on the economic data that may be tradable for those with a short-term time frame, but my view and advice right now is that this is a market for trading only. It is not time to build longer-term positions or to even think about the potential for a market bottom. When the turn does come, I will be holding very high levels of cash and will start to deploy it very slowly and carefully. I have no interest in trying to time a bottom.