It seems like the stock market isn't the only place that's getting drama lately. For those who've been watching the World Cup football tournament, you know there's been plenty of drama every day. Here on the north side of the border, we've had all kinds of drama this weekend because of the G20 summit. All in all, this world just can't live without some drama!
So... back to the stock market drama, did anybody realize that we dropped as far back as >5% SPX at last weeks low? YTD, SPX now off about -3.5% once again. It just seems surreal that things can turn so quickly. After all, market looked pretty steady right up till last weekend. A week later, we are back in no man's land. This is not necessarily a bad thing though. The index level and as well as the price level for our many plays are more attractive now than a week ago. Keep in mind, we are heading into an earning season with attractive price levels and lower expectations. This bodes well for positive surprises. As long as there's no major negative catalyst for the next while, the same trading range beckons.
One thing we are looking at heading into the new week is the performance of the financials- XLF. Now that the financial reform bill is pretty much a wrap, we want to see how the major financial plays react to this. Weeks ago or is months ago now, we were thinking a FinReg pass would be a start of a new leg up, we can’t say that is a game changer now, but it's an important piece of the puzzle as investors want and will take clarity above anything else at this point. Simply, market cannot move up without the participation of one of the key sectors and this would be a start with the financials.
Right now overall, it just feels like there's lack of real catalysts, the hope here is earnings season will surprise the Bears and even the most pessimistic Bull.
Bottom line, all focus will be on Friday’s NFP report , while the World Cup provides a distraction until. The are no ‘barometer’ corporate reports this week to note ahead of the holidays. We'll likely just have kick around in between the matches like everyone else.