How I’m playing this volatile market

The job figures in the USA were not good for President Barack Obama, the US economy, the unemployed of America, or Wall Street. But over the next few weeks, it will be company reporting that will determine the direction of stocks, unless something crazy comes out of Europe or something surprisingly weak comes out of China.

Investors’ wealth rests on these three key geographic and economic regions – USA, Europe and China – but I believe the Yanks hold the trump cards for stocks. If US companies can surprise to the high side compared with expectations for the June quarter – despite a run of disappointing and weak economic data over the period – then stocks could easily rally higher.

Changing game

In reality, it seems hard to imagine. US companies did well when their economy was weak as they were able to sell to Europe and China while the greenback was lower. Now both those two customers are growing slower and the dollar is higher. Against these negatives, the US consumer is more confident and housing is starting to look marginally stronger, but it is early days in this overdue recovery and it could easily peter out.