- New Trades -

Editor's Note:

(June 23, 2013)

I cautioned readers last week that volatility could likely continue as investors reacted to the FOMC statement and Bernanke. Market participants were not happy to hear that the Federal Reserve would begin tapering their QE program somewhat sooner than expected. That sparked a sharp sell-off in the bond market and stocks followed.

Big picture we have a Europe that is in recession and not improving. China appears to be slowing down and its banking system appears to be in jeopardy. Emerging markets are plunging with a -15% decline in the last few weeks. Meanwhile the U.S. is inching along at +2% growth but that could change with sequestration cuts expected to hit Q2 and Q3 this year.

Many have blamed the stock market's 2013 rally on the Fed's easy money. Yet now the Federal Reserve has outlined some of their requirements to end their QE3 program and what a potential time frame might be. Naturally the stock market is ignoring any of the Fed's conditions for when it might begin tapering its asset purchases and traders are focused on the time frame. It is likely that Bernanke's comments may have removed the Fed as a bullish catalyst for stocks and investors will have to find another catalyst.

On a short-term basis I expect a stock market bounce but over the next few weeks I think we'll see new relative lows. That could change depending on how markets interpret Q2 earnings season, which begins soon.

There are no new trades tonight. We just saw BEAV and Citigroup (C) jump to from our watch list to our active play list. If the market correction continues then we'll see more of our buy-the-dip watch list candidates get triggered.

I'm not providing a list of "radar screen" candidates tonight. The next couple of weeks could be volatile. It's time to protect our capital and wait for the market to provide the next entry point.