After an eye opening commodity slide Wednesday morning, all the market needed was a good night’s dream about buying the good ole’ dip. Of course, it wasn’t all that, but when you’re an investor/trader confused about ‘free money’ awash in the markets vs. economic growth dilemma going forward, hey just buy the dip and move on!. The above question will linger on; can markets live with one and not the other and/or how much of each is sufficient to keep markets rolling. This should be enough to drive one crazy with over analysis in the weeks to come. In this view, …”Overall, accommodative policy is still very much in place”…and economic growth is sufficient enough at this point, so not going to fret over it. Sort of like the premise here for months of being cognizant of European headlines, but don’t let it keep you away from equities.
An interesting reaction to eco' data today. As said for days, economic ‘better than expected’ has probably had its day in the short term. Besides the Initial claims today, (whose 4 week average has dropped by a significant 20K since the end of January), other data in the US is coming in softer this week. Yes, the US ISM was a surprise considering almost all regionals were strong in February. Durable goods, real consumption were softer too, yet market tried to hit fresh highs intraday signifying a belief by investors of the recovery holding. Recall, noted earlier Global PMI gains would need to be consolidated following last ‘flash PMI’s and that’s what it looks like has happened again, here and abroad…. “… It (PMI’s) won’t be enough to buoy the markets, but aren’t a concern as last month’s jump needs to be digested….” Feb 22. All in, it looks like it’s all about ‘Jobs, Jobs’ into March 9 allowing ‘softer’ data to be a blip for now. Today’s tape almost going back to yesterday’s highs intraday is almost a disappointment as chance for a shallow pullback to buy into NFP# was short lived as Bears were unable to stir things up for longer than an hour or two. (after no promises of morphine and what could have been construed as disappointing data today.) Instead, a potentially robust NFP# becomes the focus giving little chance to a pullback beforehand now and instead likely more upside risk.
Overall, the day started very encouragingly. Transports continued the reversal noted last week, single stock action in the RUT was very good with many names followed hitting fresh 2012 highs or flirting with such on 3-5% gains, which have become a rarity… ie.WYNN PII LULU UA IACI FOSL LVS FTNT and outside the group the momo/earnings, GS JPM might be prelude to more upside ahead in the Financials. This is the kind of action you like to see and the type we’ve been waiting for as discussed lately. (including disappointing RUT vs. SP performance of late.) Unfortunately, RUT gave up 10pts after 2pm and ended up lagging once again, while SP, NASDAQ managed to keep gains. Still, as long as closely followed stocks here perform, the mixed signals even in the RUT are better ignored.
Tuesday, February 14, 2012 at 07:12AM