Into the trading week, (Jan.9- )
Sunday, January 8, 2012 at 07:55PM The somewhat (NFP#) muted market action on Friday was a result of expectations skewed to perfection. Whispers# had adjusted to mid 200k following recent related eco' data and ADP overstatement. Despite beating consensus and coming in at 200k, it was basically inline. Considering, 40k was seasonal (guys on bikes), market held it’s week’s positive vibe with a +1.6% SP gain.
As per Journal pages all week, upbeat U.S eco’ data on the housing/ job front and surprising Global PMI’s overshadowed a quiet week in Europe. Traders (mostly) putting money on economic/cyclical related sectors,(led by housing/financial) and away from a highly correlated market trade (which was the hope here coming into earnings). Still, the question put forth early in the week is still not unanswered… “The question is how much of this high beta action was fast traders vs. real longs stepping up to the plate?”. The underweighted (positive) ‘longs’ are likely waiting to see if October highs break followed by low 1300’s before putting real money to work. As well, investors are monitoring if financials can hold up this time and not be susceptible to the usual profit taking as part of the usual ‘headfake’ routine. The early morning dips were bought this week indicating selling is not robust at all, either.
As far as Europe, it’s ways (euro slide, ECB=QE.) have been covered pretty well the past week. Being on the continent right now, can tell you most of it was still on vacation last week, adding to the quietness and away from risk. But, as noted into Friday’s trade, next week’s EU calendar is loaded. (add peripheral auctions to list of events noted to watch.). We’ll see if perceptions towards to sovereign fears continue to abate following ECB easing ways.
Earnings season is upon us soon after an incredibly busy and what turned into a highly negative pre-announcement (tech linked) season. The beginning was caught here in December and it escalated into 2012. The good thing is this all priced into the tech market, so no shock and awe this reporting season in tech. If companies provide better guidance beyond March and for 2012 as a whole, they will be rewarded.
