The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
NEW YORK (ETF Expert) -- What if the employment report for February is much weaker-than-anticipated? What if Israel drops much bigger hints about a pre-emptive strike on Iran? What if gasoline prices surge another 20% over the next two months as we head into the summer? Or what if core inflation increases so rapidly that the Fed finds itself hinting at rate hikes sooner than 2014?
For the time being, even the boldest bulls realize that stock prices may cool off after the best two-month performance since 1991. That means "long" investors have few choices but to wait before putting new money to work.
Feel like you absolutely, positively have to get into something? Consider SPDR Metals and Mining (XME).XME has set higher highs in every consecutive month since November. Yet, the ETF is more than -10% off an October peak and more than -30% off an early 2011 pinnacle. If you believe that central bank QE bond purchasing by the Fed and ECB will create significant commodity price inflation, XME is a potential beneficiary. It's nearly impossible to sift through commentary on the Web without coming across a colorful headline or statement. In this instance, I found myself "LOL-ing" at a Fast Money producer's proclamation that "stock prices are rising on growing expectations he [Obama] will be re-elected this November." How did Mr. Producer validate this assertion? He offered up InTrade.com stats that currently show Obama's chances of victory up from 50% at the start of the year to 60%-plus today. The commentator plots the rise of President Obama's re-election probability against the rise in stock prices, and concludes that the former is the reason for the latter. This violates one of the most basic tenets of statistics; that is, correlation does not imply causation. Naturally, it's easy to demonstrate the silliness of Mr. Producer's logic. For instance, gasoline via United States Gasoline (UGA) has moved in the same direction as the Dow Industrials 5 out of 6 times over the last three months. Should we conclude that higher futures contract prices for unleaded gasoline are the reason for Dow 13000?
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