There is no debate that 2011 wasn’t great for the equity investor. Yet, the volatile environment where the SP travelled hundreds of points up and down intraday gave traders opportunities on a weekly, if not daily basis. The crazy landscape even mocked the idea of ‘hedging’ as Hedge Funds underperformed greatly. No doubt, the year was one of changes. As governments fell one by one globally, we as traders had to change with the times as well. The reason being stocks became highly correlated forcing us as to change tactics mid-year away from selective stock picking to a more ETF/sector/SP market direction calls. Hopefully, upcoming earnings in January will allow reverting back to single stock trading as a US recovery takes shape with economic data continuing to come in solid. This (eco’ data) is the outlier in what has been a very disruptive 2H’2011. Last Journal of 2011, noted .. “The market will make a smooth transition into the first week of ’12 with a slew of events, notably global PMI’s..”. Since eco’ data is the one bright spot, we put a lot of hope in it for 2012. It’s seemingly been years since we’ve seen a change in Jobs/housing #’s as recently. NFP# on Friday is the other ‘big’ event in an important eco' data week.
The data out this morning has not disappointed. China, India’s and Europe’s PMI’s have come in ‘better than expected’, if not ‘strong’ gapping the market over 1260’s resistance. China moved back over the 50 expansion threshold on the back of new orders/ output components (indicating very good industrial activity), India’s was even better at 54!. Germany/UK also beat expectations. U.S expectations are for 53.2. Commodity linked stocks will be the beneficiary.
Nice start to the year with a lot of sidelined money, new funds needing to get in the market early ’12. FOMC minutes later in the day, any talk of a QE3 push will be an early 2012 gift