Stock markets will likely decline for Friday

The Fortune Teller Speaks:

US Stock markets will likely decline for Friday, November 7th, 2013, likely due to the “good news is bad” effect regarding employment and the Fed and continued fear in investors from yesterday’s massive sell off.

Wall Street Beats & Jives:

All eyes on Wall Street are focused on the non farm payrolls report, employment rate, and consumer spending reports released this morning, which all showed robust improvement for the U.S. economy. The US economy added 204,000 jobs for October despite the US government shutdown, while consumer spending edged up .2%. The unemployment rate rose from 7.2% to 7.3%, however many attribute the rise as after effects of the US government shut down.

Today we may be looking at a “good news is bad” kind of a day, because the Fed may ease off of its easing program due to the strong economic data, which could possibly spark more stock market declines. Typically such strong economic data generates strong stock market returns, however the Fed’s Dr. Bernanke, Larry Summers, San Francisco Fed John Williams, and Atlanta Fed Dennis Lockhart are all scheduled to speak today regarding the economy, and all past experience suggests that the Fed likes strong economic data because it means less tapering. If the Fed even suggests a whiff of a tapered economy, we can expect stocks to plunge like rocks in a lake. If they continue the easing bandwagon, well, who knows at this point. At the end of the day though, the Fed (and I) likes good data and investors do not like good data, due to the potentially taper free world.

Hindsight is a Beach and We’re Playing On It:

Wednesday I was again 1/3 correct, with the NASDAQ 100 again suiting me well with a -.20% decrease. Yesterday (Thursday) the bears finally decided to take over, as the S&P 500 (NYSEARCA:SPY) and NASDAQ 100 (NASDAQ:QQQ) lost well over 1%. The Dow Jones Industrial Average (NYSEARCA:DIA) lost .97%. So, the divergence among the three indexes prior to Thursday did finally mean a change in direction.

Are Stock Markets Driven by Need, Speed and Greed, OR Fear?

Judging by yesterday’s performance, markets are driven by fear, pure, plain, and simple. We could be looking at a bounce today but it is unlikely. And, given that investors may be spooked over a potentially new taper free stock market, fear will likely be the name of the game.

Totally Calling It:

My five position indicator is flashing 4/5 red for the day.

Just for Sheets and Giggles:

Fun fact of the day: Lockheed Martin is developing the new SR-72 “son of Blackbird” spy plane, which will be capable of flying at Mach 6, if funded and approved by the US Government. That’s fast. Really fast. Click here to check out the photos.

Bottom Line:

Investors are spooked and I think they will continue to be scared.

This stock market forecast is for educational and informational purposes only. It is not intended to be investment advice nor an investment recommendation. Past performance is no guarantee of or indication of future performance and your performance may vary widely from any that may be indicated in this column. There is risk of loss in all investing and trading activities and you should consult your financial adviser before making any investment decisions.

Click here to learn more about John’s book and for a free membership to Wall Street Sector Selector