The Sabrient Blog

“Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.”  ~ Sun Tzu

It is not uncommon to hear that nothing quite compares with the mad frenzy that is World Cup soccer. Nothing, perhaps, except for Wall Street, where degrees of both frenzy and madness can be as common as yellow cards dished out in the course of a fever-pitch match.

A slew of mixed financial news poured out this week, with a bias towards the negative side. In response, the Dow Jones Industrial Average retreated to the downside, ending at 10,143 and a loss of slightly over 300 points. Though the Dow began the week by ramming a header towards its 50-day moving average, it proved to be no more than a head-fake. The DJIA ended crashing below its 200-day MA, a point that can offer stiff resistance once breached.

In advance of next week’s G-20 summit meeting, China announced that it would allow greater flexibility in its currency exchange rates. The markets’ Monday morning cheers lasted briefly, until it seemed to realize that the reform offered was little more than a bone tossed in response to the Obama administration’s clarion calls to address the huge trade imbalance between the two countries.

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Perhaps it was the new senator from Massachusetts who let the bears out, but I suppose it was a bit more than that. When the week began on Tuesday, after the Martin Luther King holiday, the bulls were grazing happily on GARP stocks, as contented as California cows.  But then somebody opened that gate, and the bears roared through and the bulls ran for cover.

It wasn’t exactly a massacre, but it was far from pretty. Consider that the best style/cap, Small-cap Value, was down 4.3% and the worst, Large-cap Value, was down 5.2%.  Obviously, all style/caps were ravaged, and the week’s carnage wiped out everything we had accomplished since Santa Claus came in December. Read more…

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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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by David Brown, Chief Market Strategist

David Brown

(Monday, October 12, 2009  4:55 pm) All major indices closed at or very near 2009 highs on Friday as the week featured a combination of better-than-expected economic news and a sprinkling of early earnings announcements on the plus side. From a technical perspective, the market is extended as the Dow reaches for 10,000 and the S&P500 aims for 1,100. Will it breakout now…or take a breather and wait for good earnings reports to provide the fuel to propel it?  This week should provide some clues. Read more…

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