Sentimental Journey to the Southside
by Daniel Sckolnik of ETF Periscope
“Economics is extremely useful as a form of employment for economists.” ~ John Kenneth Galbraith
Talk about a serious display of bad feelings.
The markets were displaying an admirable sense of resiliency throughout the bulk of the week, shrugging off the sort of news that often spooks investors into bouts of melancholy mood swings.
On Tuesday, Moody’s Investors Service cut Portugal’s credit rating two levels to A1, ramping up concerns that Spain could be next in the process. If this happened just two months ago, the reverberations would have been as strong as a high number on the Richter Scale. Instead, the Dow Jones Industrial Average ended up over 145 points.
On Wednesday, May’s Retail Sales numbers were released, and they were slightly below expectations, with June’s sales down 0.5% on the heels of a 1.1% decline in May. Also on Wednesday, the Fed proceeded with its ritual reading of the minutes, proclaiming in their own inimitable fashion that “the recovery” shall continue, but maybe not on the pace they had hoped for. Both the DJIA and the S&P 500 Index responded with a sad face, manifesting in the form of a hearty round of selling. Still, the Dow managed to scratch out a win at the end of the day, though the S&P 500 ended off slightly. Read more…
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One hesitates to put too much emphasis on any given week when discussing market trends, but this week could be the tipping point for the current market. Despite the S&P 500’s 50-point gain last week on virtually no news at all, the fact remains that it is still more than 12% below the April 23rd high of 1217 and still has not broken out of the downward channel that began on April 26.
The bottom of the channel was reached about two weeks ago at 1010, and the top is now about 1080, as you can see from the chart below. Coincidentally, the top is close to where the 50-day and 200-day moving averages currently reside.
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Categories: What the Market Wants Tags: AA, AMD, BAC, BVN, CSX, GE, GOOG, IDCC, INTC, JPM, MRX, NVLS, RIG, sectors
ETF Periscope: Mirror, Mirror on the Wall Street
“‘But I don’t want to go among mad people,’ said Alice. ‘Oh, you can’t help that,’ said the cat. ‘We’re all mad here.’” ~Lewis Carroll
One version of a well known children’s fairytale features a magic mirror that, upon being asked the question “Who’s the fairest of them all?” replies with the harsh truth of reality. Such a mirror would be eminently useful at this juncture in time, when the markets are, at best erratic and yes, even a bit more schizophrenic than usual.
So in terms of the markets right now, who, indeed, is the fairest of them all? Would it be the snorting Bovines, who have prodded the major indexes past key points of resistance during the current holiday-shortened week, or the lumbering Grizzlies who pounded the indexes into submission for the bulk of the last several weeks?
Who, indeed, mirror, mirror? Bear or Bull? Or maybe a beast of a more sideways nature?
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This week should be another interesting one, but it’s hard to say whether it can match the market’s behavior last week when it donned rose-colored glasses to view four days of mixed economic data.
Last week there were negative reports from the Treasury budget, trade balance, initial jobless claims, industrial production and consumer sentiment. On the other hand, we had positive reports from retail sales, business inventories, building permits and housing starts. Perhaps the most important report was the CPI, and it came in right on the nose, telling us we still do not have to fear inflation . . . at least not yet.
The rosy outlook was helped by last week’s corporate reports. Granted, things got off to a slow start with a glum outlook from Alcoa (AA), but by far and away, most reports were much better than expected, including JP Morgan Chase (JPM), United Parcel Service (UPS), Yum! Brands (YUM), Bank of America (BAC), General Electric (GE), and Advanced Micro Devices (AMD) with its unexpectedly excellent report. So far so good for the corporate side. Read more…
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Categories: What the Market Wants Tags: AA, AMD, ATW, BAC, GE, GME, GS, IBM, JPM, sectors, SYA, UPS, WCRX, YUM
It has been a week of sparse market-moving news, but what news there was continued to be generally supportive of the market’s slow growth recovery. Remarkably, volatility continues to be very low. Unlike the 6 to 10% gyrations (in both directions) of late 2008 and early 2009, we’ve seen very few days this year when the market has moved more than 1% in either direction.
That could change — maybe soon, as this week is packed full of potentially market moving reports.
On the government side, we have trade balance data tomorrow, along with export and import price data. Wednesday brings the Consumer Price Index (CPI), retail sales, and business inventories. Thursday we have the weekly initial jobless claims, along with the fairly important industrial production report and capacity utilization. On Friday, building permits and housing starts top off the week. Read more…
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Categories: What the Market Wants Tags: AA, BAC, GE, GOOG, INTC, JPM, ORRF, sectors, UGI, USMO, VMW
Last week brought us murk and fog in an otherwise bright New Year. All style/caps were down for the week, though not drastically. The worst was Small-cap Growth (- 1.12%); the best was Large-cap Growth (-0.6%); and the rest crowded between these uninspiring returns. But given the tremendous amount of cash on the sidelines, the market seems unlikely to turn disastrous.
It could have been worse. Alcoa (NYSE: AA), Monsanto (NYSE: MON) and Chevron (NYSE: CVX) disappointed badly early in the week, although Intel (Nasdaq: INTC) brought in pleasing numbers later in the week. Government statistics were for the most part dismal — worse-than-expected numbers for trade balance (-36.4 B), initial job claims (+11,000 to 444,000) and retail sales (-0.3%). Even consumer sentiment was poor (flat, actually, at 72.8 vs. December’s final 72.5), probably a reflection of the other disappointing statistics. Only the consumer price index (CPI) was encouraging, increasing just 0.1% in December, after a 0.4% rise in November. Although Europe is beginning to struggle with inflation, the U.S. isn’t having that problem yet. Read more…
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Categories: What the Market Wants Tags: AA, AMED, BCO, C, CIG, CVX, GOOG, IBM, INTC, MANT CIG, MON, SYNA, TEL
Stocks came strongly out of the gate last Monday to kick off the 2010 Wall Street race. And indeed the market advanced throughout the week, albeit fitfully, with the S&P 500 starting the week at 1114 and closing at 1144. So let’s recap last week’s market data for some insight on where we should be looking to invest now.
Large-cap Value took the early lead and was up 3.8 % for the week. The worst cap/style was, interestingly, Large-cap Growth, which was still up 1.8% for the week. Value did better than growth in each of the caps, primarily because of the Financial Sector’s continued rally. Part of the blame for the lagging growth stocks is due to sporadic but realistic talk about valuations of large-cap techs, such as Apple (Nasdaq: AAPL) and Google (Nasdaq: GOOG). There was also concern, though not as noisy, about valuations in various Materials and Energy stocks. Read more…
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