Are The Bears Back In The Game?
The stock market finished lower on Friday as volatility struck in the final two hours of the session and the dip-buyers decided to take the day off. The primary drivers of the action included worries over what appeared at the time to be a looming government shutdown, some more hawkish commentary out of Fed governors, trepidation in front of the upcoming earnings season, and oil prices surging to new highs.
The trend in the market over the past few months has been for traders to shake off any and all bad news as new money has consistently flowed into the market. This has kept the bears largely on the sidelines and the bulls in charge. However, given the uncertainty over the potential of a government shutdown, the potential impact of higher oil on earnings, and the fact that this is an options expiration week, the buyers appeared to go home early on Friday. Thus, for the first time since the early-March pullback ended, the bears were able to get things going their way for more than a couple of hours.
On a chart basis, the market remains in an intermediate-term uptrend but the near-term outlook has become more clouded as a result of the sloppy action seen over the past week or so. The bear camp argues that the uptrend is looking tired while the bulls contend that their counterparts have been unable to do anything with their opportunities. Objectively speaking, a pullback to 1320 would be logical and a break to 1300 would put the bears back in charge of the game.
Turning to this morning… Another earthquake rocked Japan and shook buildings overnight. Asian markets were mostly lower as a result. European markets opened mixed to slightly lower as concerns about rising metal prices and mixed corporate results were pitted against continuing M&A activity and reports Libyian leader had agreed to a ceasefire proposal from the African-Union. Closer to home, stock futures have been higher in the early going but have been fading in the last few minutes and currently point to a flat open.
On the Economic front… There are no entries on the economic calendar today.
David D. Moenning
Editor: The Daily Decision
