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Sometimes it is best to keep things simple in this business. So in short, while Ms. Market can and will do anything she darn well pleases (usually in order to frustrate the masses), the bottom line result of Monday’s action is the bulls’ defense made a stand and the bears were stopped cold (well, for the moment anyway).
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Due to the semi-holiday, we will not publish a report on Friday morning. Daily State of the Markets reports will return on Monday.
Good morning. On November 5th, stock market investors didn’t have a care in the world. Stocks were at new highs for the bull market cycle, earnings continued to be good, the soft patch appeared to be giving way to better economic data, QE II was going to save the day, the democrats had been run out of town, the seasonal pattern favored the bulls, and traders could be heard espousing two very old Wall Street clichés: “Don’t fight the Fed” (especially when they are on a mission) and “Don’t fight the tape.” Sure everybody knew that the market was overbought and due for a pullback, but with everything going the bulls’ way, even a 2% decline seemed out of the question.
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After two weeks of corrective action, the key question stock traders face at the moment is: Are the bulls are back on track after last week’s strong finish? The bears will argue that Thursday and Friday’s move higher was merely an oversold bounce coupled with some options expiration shenanigans. But as one might expect, the bulls have a slightly different view of the action.
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Good morning. Stocks did a lot of nothin’ on Wednesday as traders attempted to discern if the worries about China were overblown and if the renewed contagion fears stemming from a couple of the PIGI’S were worthy of further corrective action. The bears argue that the dynamic duo of China and Ireland/Portugal represent “dueling dangers” for anyone long equities these days. But as you might have guessed, our heroes in horns don’t quite see things the same way.
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Just about the time I got done reassuring a group of friends I am traveling with that the current pullback in the stock market would likely continue to be orderly, the powers-that-be in Ireland went and made my prognostication look downright silly. Instead of what I foresaw as another day of relatively “tame” corrective action thanks to another rough outing in Shanghai, the S&P wound up falling for a fourth straight session and suffered its biggest one- day decline since early August in the process.
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SUMMARY:
- Thursday’s dark clouds start raining and blowing on China concerns: market seeking a reason to pull back.
- China’s rising inflation ignites speculation of rate hikes and slower growth even as the rest of the world cuts rates and hopes China keeps growing.
- Expectations are now for an Irish default.
- Michigan sentiment rises, but no one cares.
- Market is in correction mode and the question is now how far.
- Still looking for new buying opportunities after the selling as fund managers still want to chase performance to year end.
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Good morning. Let’s see here… QE II was a bit more robust than expected, the election results suggest that the environment ought to be a little less hostile for business, and the economic data – including the all-important jobs report – has been coming in largely above consensus lately. This combination put traders back in a “risk on” mode last week, which pushed the dollar and interest rates lower and just about everything else you can think of higher. Thus, with the backdrop seemingly quite positive and the “most wonderful time of the year” upon us, the question of the day is if the bulls can be stopped between now and the end of the year.
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SUMMARY:
- Jobs data tops expectations by a long shot but cannot move the market. It doesn’t sell off either, and that is just as important.
- Decent jobs report is far from ‘very good.’
- Luxury retailers signaling an economic recovery?
- Riding the move higher with existing positions and some new ones while keeping an eye out for a pullback.
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After a brief hiatus filled with lots of intraday volatility but virtually no price progress, traders could be heard yelling “game back on” yesterday in response to the launching of QE II. In short, it was back to business as usual on Thursday. And with the dollar plunging to new lows for this cycle, traders put the “risk trade” back on, which, by the way, was one of the stated goals of Bernanke & Co’s latest campaign.
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EARNINGS: 10/26/2010 after the close
STATUS: Breakaway gap. BRCM announced earnings last week and bolted higher with a strong, high volume gap. The gap took BRCM over its July peak. Gap, strong volume, through resistance. All the elements are in place. One of our favorite earnings place are these breakaway gaps because they tend to continue running in the direction of the gap. BRCM tested modestly this week, moving laterally in a tight range. Wednesday BRCM started back to the upside, and it looks as if BRCM is ready to continue its gap move. Looking to move in as BRCM continues upside, still riding the strong earnings and momentum from the gap.
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Good morning. If you’ve been paying attention at all over the past few weeks, you can most likely complete the thought in today’s title. While I’d like nothing more than to offer some thoughtful analysis on the state of the market this morning, the only real thing that matters right now is the macro view and more specifically, the expectations for the Fed to launch the QE II on Wednesday.
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SUMMARY:
- New month, new economic data, same results.
- Personal income, spending disappoint. Construction, ISM surprising.
- China PMI tops expectations and market rallies. US ISM (PMI) tops expectations, market flat; but it already rallied on the FOMC right?
- Market is taking the wait and see approach ahead of the two big stories . . . just in the first part of the week.
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