Stock Market Analysis August 23, 2013

Morning Stock Market Thoughts For August 23, 2013

— Happy Friday! After yesterday’s impromptu half-day of trading there isn’t too much to say. Futures are basically flat this morning and I’ll be watching the open to see if the bears or bulls come with control.

If prices are going to march higher, I’m hoping to see some TLT stabilization and good price performance out of IWM and ITB/XHB. I’d also like to see XOM stop the bleeding. I’m cautiously optimistic but will be careful to let market action be my guide.

Trading Thoughts On Stocks I’m Watching Today:

Without a clear trend direction, I will continue to accumulate strong businesses at fair prices. By shopping for small cap names with robust balance sheets I’m relatively able to insulate myself from a broad market correction (to an extent). And even if names like SNV and TINY get sold off hard, I’m familiar with the fundamental economics of their respective businesses and will consider averaging down.

On the other hand, many stocks are over-priced after this 10 month market run. And I’d be happy to see a pause, or even a reset, to some more realistic earnings multiples. I’m continuing to stalk an entry in BRKS and watching the FMD saga with one eye, just for kicks.

Other Thoughts and Good Articles I’ve Read Today:

July new home sales data are due out in the U.S. at 10 AM ET. Economists predict sales fell 2.0% to 487,000 units annualized last month after rising 8.3% to 497,000 the month before.

The cost of taper talk: Market reactivity to the remarks of Chairman Bernanke are astounding. I’m not sure how much stock you can put in the unemployment and other recovery data. So it sure will be interesting to see how things go should the Fed reduce purchases.

Afternoon Stock Market Analysis August 23 2013:

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