Ahead of the open, (09-05)

The morning noise ‘supposedly’ cratering the market was because some ‘left wing’ potential Greek PM said austerity was null and void.  But, this isn’t the true backdrop.

  

The true culprit is tier 1 economic data is a ‘void’ and QE (judging by Gold/TSY’s) is a ‘null’.   Simply, there is nothing for investors to go on!  This goes back to last week’s note on market out of ‘catalytic’ events.  No eco’ data on the calendar to believe in growth and no QE as a market alternative.  It wasn’t too long ago the market had both and debating which one will win out (escape velocity growth or QE).  SP component earnings were done with a few weeks ago as trends became known and rallied the market. Now, the market with nothing to go on is using small caps (ie FOSL for retail, RAX for clouds) as examples for the general market.  The violent reactions are indicative of what was discussed earlier in the earnings season where high multiple stocks are being reset on valuation.  If you don’t show growth as you once did, we will punish you is the market message.  Still, using FOSL as a proxy for all ‘growth’ and/or European connection is not warranted as it is company specific, but investors are shooting first.  All peer names in this category were whipped early, but recovered substantially by close (ie LULU, RL, UA). Cloud peers bounced as well.

  

Today’s rally back to 1363SP from 1347 and Monday’s reversal from overnight lows shows ‘Bears’ are not so comfortable either as they cover instead of pressing more shorts on.  The critical level is high SP1350’s on a closing basis.  Although, high beta is being reset in spots, most of the trading is still ES/ETF shifted.  It’s going to remain a bumpy ride as ‘headline risk’ from Europe will dictate until clarity on growth.