The Sabrient Blog

Tipping Point Deja Vu

by David Brown, Chief Market Strategist, Sabrient Systems

Seems like we were here just last week, waiting for the market break out of its “Channel of Gloom” or tip further into the Channel’s murky depths.  In fact, we came close to tipping to the positive side last week but were held down by a poor consumer sentiment report on Friday and negative earnings from Google (GOOG), plus a double negative whammy from Bank of America (BAC).  Not only did BAC announce negative revenues, it let loose with a scary warning about the negative impact of write-offs from the new financial regulations. So on Friday, the S&P 500 tipped further into the three-month Channel of Gloom.

Today  the market drifted near the unchanged mark most of the day, but S&P 500 managed to close up +0.6%, well below the top of the Channel and still submerged below its 50-day and 200-day moving averages.  In the after-market, following IBM’s disappointing revenues report, the market gave it all back, and then some.

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Since the market ditched its typical Monday mania today, maybe we can escape the inevitable depression that has followed in its wake.

For five consecutive weeks, the market has started with an up-day only to tank for the rest of the week. Some have blamed the Monday upsurge on weekend manipulation of the futures market.  If that’s the case, it didn’t work today. Overall, the S&P 500 has fallen from a high of 1150 on 1/19 to a low last week of 1044, losing approximately -9% from its high five weeks ago.

In contrast, I would expect this week to be a rather quiet one, as upcoming economic releases are somewhat muted.  Only the trade balance on Tuesday, retail sales and weekly jobless claims on Thursday, and consumer sentiment on Friday are thought of as potential market movers. Read more…

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