Heading into this light news flow week, DJIM highlighted the micro(earnings) and macro(eco data) to navigate through the ‘panic’ set by FED/ CSCO.   This week’s data has loosened the rope around the Bulls neck, but that may only be until Thursday’s important Initial Claims number.  

Today, the market received ADI earnings, noted a few times here coming out with excellent numbers into the market open.  “Looking ahead to the fourth quarter, given our higher opening backlog, we are expecting continued revenue growth (0.65 (vs. St 0.60) w/revs $720M (vs. the St $706.5MM).We anticipate that revenue will be in the range of $740 million to $770 million for the fourth quarter (St $716MM).    Later, retailer TGT ’s CC was on the consensus money relieving the street on top of the HD, LOW, WMT we had earlier in the week.    As it turns out the 2 groups highlighted in DJIM#33, Semi’s (SMH) + retailers (RTH) are the outperforming groups in the market today keeping the market near 1100SPX.    Still, despite the seemingly large swings in the broader indicies, today’s trade hardly was individual stock based as majority did nothing to either sides moves, except those in M&A speculation. (POT X MOS)

The “macro equation was boosted this week with a reversal in the key IP(Industrial production)  after a terrible July tick.   Tomorrow,  the last 2 week rise Initial Claims  will be tested.   This is very important as the number has been stable all year until the last 2 weeks, if this number goes back to approx 460k levels and shows a reversal like the IP, it will likely be enough to rally the market.   If it stays on par or is higher than previous 2 (480K), it will get the ‘double dip’ noise going strong and this week’s stability will be shook as a trend will be exposed.    Put it this way, all the hoopla around ‘M&A’ as a good market sentiment this week will be dampened and forgotten quickly.   Be careful...never has IC# number been this important.