So here we are, with the averages appearing to lose a bit of steam – even if in the green by a smidge. As noted in your last update – and your videos from last week – we have reached that stage in the stabilization procedures where the markets are likely to struggle.

We had suggested at the time that there were key price ranges that would be magnets for battleground status – not to be confused with the reference in politics.

We reiterate that this is likely and would not at all be surprised to see some of the rally get taken back. Nerves remain on edge – only mild – and I do mean mild improvement was seen in any of the sentiment surveys and massive sales of equity funds were literally just registered in the last two weekly readings.

I point all this out so that we step back and recognize this as a normal set of expectations and keep that in mind if and as it unfolds. One note: If we do not get even a mild pullback and some chop for the next couple weeks even, I would suggest the market is telling us that it is far stronger under the surface than most realize.

Even with a few more setbacks, the long-term surprise here remains to the upside in our view.

A Chuckle in Order

The roller-coaster in crude prices has seen its steepest moves in the last 30 days or so. In late January, prices broke below $30. At the time experts stated this was a watershed event and a clearly defined sign of a waterfall collapse to $10. We chuckled at the time.

We also stated this, “Be assured there will be a time sooner than most think where prices will rise again and we will quickly be told that this price rise in crude will begin to hurt the economy and the consumer. In essence, we will learn once again that rising oil prices are bad for us and falling oil prices are bad for us.”

So, the chuckle?

I bring you a snapshot from a headline just posted on a major financial website – with plenty of experts chiming in:

It is interesting to note that the headline writers always have the most fearful looking photos to use right? If you are really interested, you can follow the associated article here. Don’t sip any coffee while listening – you may risk choking in the midst of the laughter.

What Now?

The market has staged a fairly solid effort at stabilizing. As covered with several advisor clients last evening, I suggest we expect there is more work to do and likely a bit more volatility to suffer through in the near-term.

The bounce in oil has taken some of the edge off the “high yield debt will collapse the world over” fear and that will end up helping a bit.

That noted, we still have the “earnings recession fears” that will likely stay around for another quarter or two of readings.

As we had covered at the start of the year – we likely need to get through Q2 numbers before Q3 numbers will begin to anticipate the round-tripping of the worst of the energy shock in the earnings calculations. Recall that earnings are still up if you leave out the shellacking in the energy sector.

The Bottom Line

Here is the deal: As tough as it is to witness in the near-term, I suggest we pray for continued chop and angst. Pray for the fears to last longer and stay embedded. Pray for the “earnings recession” to have another quarter or two in its lifespan. Pray for the headlines to get ugly again….and the experts to tell us why all of it is bad for us.

Use periods of red ink to your advantage even though you will not get the exact right day. We never do but they end like all the others have. They are never fun to endure or live through….they test your will to build when others refuse to.

The really bad part of the process of building wealth over time is that as we age we learn what Warren already knew years ago:

To get the results shown in those long-term readings of annual returns, we need to invest the whole way through during the good and the bad.

We can’t time or guess the future. I sure wish we could though – but then it would get boring fast right?

If we could, there would be an algo written to disprove it.

Patience and discipline my friends….patience and discipline.