Is it tough enough?
Friday, July 23, 2010 at 07:00AM Is it tough enough?.... Bulls and stress tests!
The puzzle reaction that was to Bernanke’s address was quickly solved by the market after a night cap or two. As we said, “thank god” the monetary policy statement didn’t just change overnight since last FOMC/minutes and instead disappointed those looking for much more. Those looking for much more maybe just don’t realize the Bazooka has little left to launch at the economy! What’s left is pretty clear to market observers.
We would love to discuss the rally that moved through the April/June trendline, but by noon Friday or earlier in the morning, we’ll all have to shift our focus. Also, once again the ETF/futures downdraft reversed as speculated!. This (black box initiated) phenomenon is easily noticed if up against the DJIM shadowlist intraday.
Still, we’ll repeat the important catalysts that were noted in premarket alert that we have going forward after we get through the ‘stress tests’ mania. Actually, we can make it three!
- Euro eco data points strong and the big worry of slowing across the pond is abating due to these numbers.
- China went above 50ma is confirming a bottom now ….as noted a few days ago…“Most importantly, Shang is over 20ma and should be watched as we could be off the ‘bottom” in commodity linked stocks. We all know even when the overall market doesn’t give you gains, trading the commodity linked stocks is all we need if a trend is beginning”
- Earnings, Earnings! UPS,MMM,QCOM etc.
Okay, the shift tomorrow!. Maybe, miraculously all the ‘good things’ across the globe today will mute the stress tests outcome and maybe it is ‘priced in’ or will be 'tough enough' to satisfy. If so, we'll break the top. But, we know this market near a range top has a habit of finding a reason to fade, so we have to be prepared!. If today‘s ‘good things’ and ‘priced in’ don’t work, we hope there is more than 1 bank (Hypo) failure or the rigor of the tests will be questioned. Yes, the market wants to see failure, but leaks this week have shown this not be the case, so we'll need the tough enough angle most likely.
Watch $TNX for first signs of a lack of investor confidence in the transparency of the tests, the market will follow.