SUMMARY:
- Stocks start higher but rather bland Bernanke testimony to Congress fans fears of stimulus withdrawal and stocks and commodities fall.
- Q4 GDP Second iteration bumps up growth to 3% but the gains try to cloak some disquieting internal numbers.
- Chicago PMI storms ahead, begging the question how could there be economic storms ahead?
- Did Bernanke’s comments, or lack thereof, mark the beginning of the end of easy money?
- Overall stocks hold up well on the Bernanke blip, but the small caps look worrisome.
- Looking for a reason to sell? Reactions to seemingly innocuous influences give insight into the market’s psyche.
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SUMMARY:
- Stocks downbeat to start the session but the bids return and leaders move ahead even if the indices lag.
- SP500 crosses to a new post-bear market high. Can’t hold it, but it is breaking the ice.
- G20 tells Europe to solve its own issues for now so German parliament passes the second Greece bailout installment while S&P cuts the bailout fund’s rating to negative.
- January Pending Home Sales rise 2%, topping expectations.
- Tax lessons from real life: UK raises ‘wealthy’ tax rate 10 points, reduces tax revenues.
- More of the same: stocks continue to move from low to high, leaders continue to lead. Overall, however, the indices struggle to advance.
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SUMMARY:
- Stocks start stronger, give up the gains for a mixed close as the slow slog continues.
- Slow overall, but some solid moves from solid leaders.
- Michigan Sentiment Final jumps again.
- New home sales fall in January, but opposite of Existing Home Sales, they do so because of an upward revision in December numbers.
- Geithner says ‘no quick fix’ for gasoline problem. No there is not, but we would already be ‘fixed’ if we had taken action back when they last said there was no quick fix . . .
- President pushes algae fuel as he takes credit for higher oil production that had its beginnings before he was even running for President and when he has only 3% of offshore zones closed to drilling.
- Excess money helping fuel higher fuel prices.
- Indices end the week basically unchanged, i.e. still rising but making virtually no overall progress. Individual stocks are the upside key for now as we watch for rollover signs.
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One of the most interesting/difficult aspects of trying to manage money in the stock market is the fact that the game is always changing. And I’m here to say that one of the most dramatic changes I’ve ever witnessed in my 24+ years in this business has occurred in the past four months. In short, never before has the importance of being flexible been more evident as this market morphed from a violent, bucking bronco that moved hundreds of points on the latest headline or rumor out of Europe into a steady-Eddie, Energizer Bunny.
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SUMMARY:
- Indices bounce off their short term tests as another dip finds some buyers.
- Up again but still an almost painfully slow upside move.
- European officials change their position, now forecasting a 2012 contraction even as German business confidence trends higher.
- US earnings remain good but the 2012 guidance, similar to Europe, is downbeat.
- Jobless claims hold steady but are still on a trend lower, a very slow and very late trend lower.
- Germany throws in the solar charger, phases out solar subsidies.
- And you wonder why the recovery is weak: President believes productivity led to US unemployment problems.
- Morgan Stanley calling for a 14% market correction in 2012. It doesn’t look as if it is happening right now . . .
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As the saying goes, “It’s not the news, but how the market reacts to the news that matters.” So, with this time honored Wall Streetism in mind, I have but one question (ok, maybe two) for the bears out there this morning: If you can’t get anything meaningful going to the downside when weak macroeconomic news shows up, when will you? If you can’t produce a triple-digit Dow decline on weak PMI numbers, what’s it gonna take?
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SUMMARY:
- Stocks lethargic and lose ground, not on sellers, just on a lack of buy side interest.
- European services suggest backsliding into recession again.
- China sees manufacturing rise, but still at contraction levels four straight months.
- Existing home sales rise but only because the prior gains were revised lower by 5%. At least inventories are lower.
- President’s corporate tax overhaul has a major flaw: it doesn’t cut corporate taxes.
- Market looks tired, but the pullback is putting some good stocks in potentially good upside entry patterns.
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I continue to get questions as the reason behind the current run for the roses in the stock market. What about Greece, they ask. Aren’t there huge problems with the bailout deal that was finally arranged on Tuesday? What if the private bond holders don’t go along with the debt swap? Isn’t there a risk that the Germans won’t approve the deal? And won’t we eventually see a default? What about the rest of Europe? And what about those big problems in Portugal? And on and on and…
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SUMMARY:
- Greece deal reached, Greece gets its second bailout installment. Much rejoicing.
- Gold pricing in inflation, Oil pricing in Iran and breaks out.
- Home Depot earnings provide hope for housing or is it just a hot flash?
- Saks earnings nice, Wal-Mart not so nice. The classic turn in retail.
- Some buy on close orders for a change.
- Dow hits 13,000 briefly as the indices move higher, but the move is surely slow, not as exciting, and harder to find ways in.
- Last hour rebound shows the bids are still there but harder for the market to get lathered up.
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One of the great things about the stock market game is that it is always changing. Just about the time your ego tells you that you’ve got the game licked – boom – the game changes completely. One minute you may be on top of the world calling every wiggle and giggle in the market perfectly and the next, well, you’re wondering why on earth your account is red when the market is sporting a big green number. And although I’ve said this a time or twenty over the past few years, THIS is why I prefer a systems-driven approach over the subjective, manager discretion approach to managing the market.
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SUMMARY:
- Stocks overcome minor selling attempts on the week, post gains along with some new post-bear market highs.
- Still feels as if you have the tiger by the tail, but thus far the tiger has not tried to swat us.
- Gallup puts Unemployment at 19.2% as CBO tells us long-term unemployed still at 40%, where they were in 2009.
- Philly Fed forecasting 30K jobs created in February. Why won’t people hire?
- CPI ‘lighter’ trumpet the headlines, but the core is hot and getting hotter: beware gasoline prices.
- Sticking with what is working but the ranks of quality new plays are growing thinner.
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During the majority of last year, it seemed that all (yes ALL) the news was bad. Greece was surely going to default, which was going to trigger vast unknown quantities of CDS, which, this time, would tank the global banking system, which, in turn, would send us back to the middle ages bartering for goods and services with grains and livestock, and protecting our homes with guns. In a nutshell, the news flow and the macro outlook was a nightmare as no one could imagine anything positive ever happening again.
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SUMMARY:
- Bids not out of the market but they needed some help Thursday.
- Have liquidity, will rise: ECB following the US’ steps in liquidity 1-2-3, world markets gain.
- PPI comes in hot, but it does not matter, right?
- Jobless claims continue their trajectory of improvement.
- June Housing Starts rise more than expected.
- Philly Fed manufacturing rises edges expectations, posts solid gain.
- Sell on close orders again, but thus far not inhibiting the market move.
- There are problems to watch for, but only to watch for at this juncture.
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After running up more than 12% since the December 19th low, stocks did something that while common last fall has been rare lately – they went down in an ugly fashion. With futures spiking higher in the pre-market on word that China was still planning on lending a hand to Europe eventually (at the right price, of course), it looked like it was going to be just another day at the office for the bulls. European bourses were up more than 1%, Asian markets had enjoyed strong gains, and our stock futures were sporting a bright shade of green.
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SUMMARY:
- Stronger start, no follow through, and even a reversal in some key names.
- Weak but not as weak as expected EU GDP propped up by China promise to give money.
- New York regional PMI solid, Production and Capacity solid as well.
- Homebuilder confidence hits a 4 year high. Do you trust the used car salesmen of the housing industry?
- When you believe 2.9% GDP growth is a good thing, 5.2% to 6% unemployment is full employment, and growing the deficit by $5T is a good cut of spending, you have problems. In short, the US has problems.
- Trips to support increasing in frequency.
- More downside plays are setting up and providing good risk/reward potential. That tells a lot of the market story in itself.
- Remain vigilant and reasonable in expectations as the pullback looks to be taking root.
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As we look back on the seventh consecutive session of the current sideways-is-the-new-down market, it becomes clear that Greece is still the word. While I was secretly hoping that we could finally be done paying attention to absolutely everything that is uttered by politicians on the other side of the Atlantic, yesterday’s session made it clear that this is simply not the case. Yep, Greece still matters whether we like it or not.
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SUMMARY:
- What do you know, there may not be a Greece austerity agreement after all.
- US stocks struggle all session, then in the last half hour stage a furious rebound back to flat.
- January Retail Sales half expectations due to auto sales. But are not auto sales jumping?
- December Business inventories rise in line, sales rise as well: no goods piling up unwanted.
- NFIB Small Business Confidence rises again, hanging on but showing some cracks.
- Late rebound a sign buyers are still there or a sign buyers are growing thin?
The stock market has confused and confounded a great many investors so far in 2012. While the macro negatives are seemingly monumental and there are no easy answers available, the S&P 500 index is up +7.5% so far in 2012, +12.1% from the December 19th low, +16.7% from the November 25th low, and nearly +23% from the October 3rd low. This action has the bears crying foul and has left lots of folks scratching their heads.
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SUMMARY:
- Greek austerity agreement, Greek bondholder agreement, positive Italian bond sale allay investors’ Friday fears and markets rally.
- Negatives are not worrying investors for now: higher gas prices, Japan’s incredible shrinking economy offset by increasing optimism.
- Optimism too high? Barron’s cover touts Dow 15K, golden crosses (no, not talking about the Catholic contraception controversy) dominate technical discussions, and television traders say pull your shorts (not those shorts).
- Insiders selling heavily.
- Chips are not down but are rather suddenly struggling.
- Obama budget cuts an alleged and illusory $4T but even if true still leaves the deficit growing by $5T.
- Bad time to cut spending? What about bad spending such as corruption and waste inside the government that benefits no one?
- Sentiment may be high but the market keeps setting up new stocks and those stocks keep finding buyers.
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In light of the fact that the current stock market seems to be all about the macro outlook, it would be logical to assume that investors will need to get the economy right if they are going to be correctly positioned this year from a big-picture perspective. While this is most definitely not the approach I take to investing in the market (and no, I am not going to go off on another rant this morning), a great many investors do utilize such a macro-based strategy.
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The Market Video is DIVIDED into component parts: Market Overview, Economy Summary, Technical Summary, and the Next Session. This allows you to choose the segments you are interested in without having to find the segment in a longer video. Click on the link to the portion you wish to view.
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When the market does something confounding, such as rally for the better part of eight straight weeks in the face of an ongoing crisis, it is soooo tempting to form an opinion of the action and to base your investing strategy on that opinion. For example, one of my colleagues pinged me yesterday with a note saying “This rally is suspect, I don’t believe in it.” My response was short and straight to the point, “I don’t judge market moves, I just try to stay in tune with them.”
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SUMMARY:
- Finally a Greek deal. Where is the parade? That is Friday in the tear gas induced haze in the streets of Greece.
- Stocks show the old low to high again.
- Jobless claims still improving as continuing claims bump higher in a bit of a peace offering by the statisticians after last week’s jobs report.
- Wholesale inventories predictably rise.
- The market rise is now akin to holding a tiger by the tail. Go with him until he figures out you are there and tries to swat you.
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One of the bear camp’s big gripes about the current rally – other than the idea that it came out of nowhere and caught the nattering nabobs of negativism flat footed, of course – is the fact that volume has been lacking. As any chartist worth their salt will affirm, a market doesn’t need volume to fall but a strong, sustainable rally should be accompanied by increasing volume. In short, rising prices being accompanied by rising volume represents strong demand. As such, our furry friends contend that the current joyride to the upside isn’t long for the world.
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SUMMARY:
- Little news and the indices show the low to high action yet again.
- Earnings appear improving after a mid-season dry patch.
- A Greek deal is imminent, again.
- Dependency Programs consuming evermore of our funds.
- Earnings continue to push stocks, but with no resultant major upside moves in the indices, stay aware.
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Although our models told us to hop back on the long side of the market six weeks ago, there are a great many investors out there – individuals and professionals alike – that have missed the current rally. For example, I personally know three investors who make their living in the market that have been either short or entirely in cash during the current joyride to the upside.
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SUMMARY:
- Stock indices add just modest gains, but the action once again is the positive low to high move.
- DJ30 joins NASDAQ and SP600 in breaking through the prior bear market highs.
- Bernanke dismisses the jobs report more than we expected.
- Bernanke’s adherence to his dovish ways thumps the dollar and bounces gold.
- Bumping the highs, still good patterns, but watching the door.
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The stock market has put up weekly gains for five consecutive weeks now and has finished in the green in eight of the last ten. The DJIA closed Friday at its highest level since the market bottomed on March 9, 2009. The NASDAQ finished last week at its highest level in eleven years. And January was one of the best in years. But with the news shows still droning on about all the macro risks, investors may be wondering if any of the above is meaningful.
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SUMMARY:
- A boring Monday, but after breaking to new highs, a good Monday.
- Not much news to drive the market and it doesn’t go anywhere.
- Economics upping their outlook for the US economy now that the indices are hitting new highs. The timing is about right and suggests to keep an eye open for a pullback.
- Not much money moving into the market, but with low volumes, it does not take much to move stocks.
- So far another very orderly, easy test with no signs of a more severe rollover.
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SUMMARY:
- Jobs beat expectations, provide additional strength to the rally.
- As DJ30 knocks on the door, NASDAQ, SP600 kick the son of a (expletive) in and break to post-bear market highs.
- There are no doubt more jobs, but just how many and what quality? A look into the manipulation of the internal numbers providing the results.
- January ISM shows strong employment gains in the midst of a banking layoff binge.
- Factory orders quietly slip in December, matching the decline in other data, but no one cares as all eyes are on the lagging jobs data.
- Iran preparing a 6,000 mile range ‘Great Satan’ missile. No, we don’t need a missile defense system in the ‘modern’ era of terrorist warfare.
- More upside or time for a test? At least the indices are dealing more from a position of strength.
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SUMMARY:
- Market looks through some pretty bad economic data, perhaps foolishly, perhaps not, rallies DJ30 over 13K and SP500 to a new post-bear market high.
- Volatile session that sees the bids return yet again, perhaps thanks to some AAPL iPad 3 stories.
- January Durable Goods Orders putrid but there are a couple of reasons for the pathetic showing other than the pathetic economy.
- Case/Shiller says ‘bumping along the bottom,’ suggesting the price declines are over.
- Consumer Confidence jumps, but this iteration doesn’t account for most of the gasoline rise and other surveys show a recent, marked drop in discretionary spending.
- We have reached the point of intellectual disconnect in the name of power.
- Leaders keep rising, pulling an overall reluctant market with them. If some of that bond money would go to stocks, they would truly soar.
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SUMMARY:
- Growth leads toward the 2011 highs while SP500, DJ30 stall.
- Jobless claims continue their modest improvement.
- Productivity stalling, perhaps adding to need to hire.
- January Same Store Sales mixed and overall lower.
- Bernanke makes a shocking prediction.
- Indices start to bump the highs but stocks with room to run are still running.
- Beware of a run higher on the jobs report: will bids hold on more good news right at the old highs?
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Up until just recently, the bulls’ battle cry had been three simple words: “Better than expected!” In short, for the better part of the last month, the economic data for the good ol’ USofA had been coming in above consensus expectations. To anyone paying attention to such things, this steady stream of strong reports suggested that the country’s economy might actually be better than the bears had led everyone to believe. And as a result, stock prices have been adjusted to higher levels.
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SUMMARY:
- After a short pause stocks continue the move toward the 2011 highs.
- US data, earnings again not stellar, but with the perception of EU action they are good enough to support the market move.
- China, EU PMI numbers top expectations.
- US ISM rises, though less than expected.
- ADP jobs miss expected mark.
- NASDAQ moves through its February peak, the initial high in the 2011 top, but SP500 falls short.
- Wednesday is not a breakout, but there is still room to move.
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With stocks having effectively moved sideways for the past eight sessions, the question of the day is which way we go from here. The bulls will argue vehemently that the bears have had ample time and opportunity to get something started to the downside – and have simply failed to do so. Yet on the other sideline, our furry friends are quick to counter with the argument that yesterday’s economic reports poke a big fat hole in the bull camp’s thesis.
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