Monday, 27 January 2014

This week is a busy and important one

The last week in January is always a busy one.  Usually most focus is on the global quarterly earnings season which really kicks off at this time of year.  This week sees major companies from all parts of the world reporting.  Expect some market influencing insights from corporate names such as Apple, Google, Exxon Mobile, Siemens, Honda and Amazon amongst many, many others.

Economic and financial numbers are dominated by the final Bernanke-led Federal Reserve meeting.  Another US$10bn off tapering?  The supporting cast is led by the first cut of Q4 2013 economic growth numbers from the US and UK. Chinese New Year at the end of the week is another event to be aware of.

And then, of course, there are the markets.  After last week's 'worst discrete week' since 2012 for the US equity market, Monday markets have again started weakly. What is the key number to be looking at?  Well, it is not whether the FTSE100 has a go at the 6,500 level or the S&P500 1750 index points, but if the VIX breaks 20. 

During the June and October bouts of market volatility, as shown below, the VIX peaked just north of 20.  Of course neither of these events was a real crisis and a VIX print north of 20 equated to a big buying opportunity. 
 


Is it different this time?  Well certainly current events are complex but in line with my previously stated thoughts in favour of 2014 being a stock picker's market, a VIX north of 20 will inevitably throw up individual investment opportunities.  That is what I am focusing on.  Keeping an overall prudent position but keeping active too.

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