No Eco’ data, no corporate reports could make the market do anything last week. By close, SPX was up or down , less than 1% Monday thru Friday.
We said earlier in the week…“We don’t expect conviction to show up on buy or sell side. If we do a up move like today again, we would not put too much into it as profit taking will show up again and we’d use exaggerated weakness to pick up those most affected from our core.”.
This idea lasted all week, the profit taking continued once again on Friday as positive Tech earnings were sold off early in the morning and Thursday weakness to 1015 was bought up. Unfortunately, we don’t expect things to get much more exciting this week as this theme should prevail once again. As disappointing as Friday was because of the failure to even hold 1030 (new cycle 1039 hit), we doubt it is disappointing enough to break 1015 due to vacation season week in full bloom. (FTSE/UK closed Monday). Still, we have important eco data points this week to possibly sway the market. (ISM #‘s this Tuesday + Thursday, in addition to Friday’s labour report being on deck.
*We'd watch the financials closely, if they can no longer maintain strength this market will correct.
What can we takeaway from last week?. We prefer to look at a positive for the whole recovery process emerging in 2H’09 as July end Tech reports have been solid and even a June Q end (INTC) raised revenue guidance. This is something the market will get eventually and start looking ahead more as analysts will begin to revise forecasts upward and some companies will likely follow up INTC with surprise pre-announcements.