Despite 100B euro thrown at Spain and leakage of central bank intentions late yesterday, the S&P 500 has only rallied 3 points this week (Thursday's close) versus Friday's close. That's a lot of money and jawboning with little results. Of course next week is the doozy as we expect binary events to unfold. Sometime between Monday's open and Wednesday afternoon we could have +3-5% or -3-5% based on election results and FOMC rescue. Sentiment has gone from dour to bullish from anecdotal evidence based on what I am reading the past 12 hours. It shows how people now put more value onto central authority intervention than underlying data.
This morning we have another putrid economic # (NY Empire), but just as with yesterday's weekly employment claims it doesn't matter to a market who believes central bank easing fixes everything (at least in the stock market). The same pattern repeats itself every year, economic data goes from "hopeful" to "ugh" in the spring/summer, and the authorities arrive on their white knights to put Humpty Dumpty together again. The economy pops a bit… the market rallies for half a year, and then the Eurozone flares up. Then the economy slows, and we repeat the cycle.
Technically there are a few areas overhead to keep in mind, 1340 (and 2900 on the NASDAQ), and then 1350 (the falling 50 day moving average), and then the 1359 area which was the April lows. So most likely to see a real safe zone, capturing 1360 and sticking would be the end zone that would make bulls content – in this environment I suppose that is one gap up day (Monday?).
Leadership? It is lacking – No Google, no Apple, no Priceline, very little of the "go to" tech stocks are really following through. What we have is utilities, dollar stores, and some select biotech (although that latter group is hit or miss).
And again U.S. bonds are not falling off despite all the hopium… TLT ETF sits at its 20 day moving average
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