Waiting for the Fed

The action on the US equity markets today was comparable to an amateur production of a Samuel Beckett play: minimalist, but with a certain impatience to it. Without any blockbuster earnings reports and no economic news of note, traders chose a wait-and-see approach as the Fed meets tomorrow and issues their declaration (most likely no change) on interest rates Wednesday.

Despite moderate volume, the major indices barely moved. The Dow gained 3.76, the NASDAQ added 5.60, while the S&P 500 lost 1.56 to close at 1420.62, barely ahead of the 2006 finish (1418.20). As I mentioned at the end of last week, unless there's a big rally or sell-off tomorrow or Wednesday, the January Barometer will not provide any direction going forward.

Since most markets are averse to indecision, the likely direction is down. There isn't enough good news and with earnings season closing quickly (2 weeks), there's going to be a dearth of news, leaving investors to their own wiles - usually not a good thing, "idle hands" and all that considered.

Stocks are valued pretty richly at present, posing opportunity for profit-taking at the least, outright fear of a crash at the worst. No stretch of imagination can perceive this market as cheap or reasonable.

The word a lot of analysts like to use is frothy, as in a heady mug of beer. And we all know what happens to excess froth. It either gets blown off the glass or oozes down the sides. Neither metaphor is particularly good for equity investments.

So, we wait. For nothing, for now.