Floor Talk - The stock market has maintained the bullish bias that was planted yesterday after news of the Greek deal. It has done so presumably for a variety of reasons:
The weak Retail Sales report for June (total sales down 0.3% and sales excluding autos down 0.1%), combined with the weak export/import price data, and the drop in small business confidence have fed the belief that a policy rate hike is apt to wait past September
An improved technical posture as the S&P 500 wasted little time today reclaiming a position above its 50-day simple moving average (2100)
Enthusiasm for potential M&A activity as The Wall Street Journal reported its sources claim Tsinghua Group, a Chinese state-owned company, is preparing a $23 billion, or $21.00 per share, offer to acquire Micron Technology (MU 19.50, +1.89, +10.7%)
The added kick here is that analysts have been quick to suggest that such an offer, if it were to be made, is far too low, so participants are making value-based trades today in a number of beaten-down technology stocks
Continued leadership from large-cap technology and biotech stocks, which have been hard hit in recent weeks
A Bank of America/Merrill Lynch survey showing cash positions among money managers are at their highest level (5.5%) since the Lehman Bros. fallout.
That report is being viewed as a contrarian buy signal since it suggests there is a lot of pent-up buying potential from professional money managers.
The nuclear deal with Iran, which, on the surface, points to the prospect of a relatively less dangerous world and opens the door for potentially lower oil prices in the future as Iran comes to the market with added supply
To be sure, there is a newfound sense of relief that more recent risk factors for the market (i.e. Greece and China in particular) are not about to blow up in its face.
That thinking is readily apparent in the CBOE Volatility Index, which has dropped 22.3% this week alone and is now down 35% from the peak it hit (20.05) last Thursday.
On another level, we'd venture to say the rebound action this week suggest market participants expect Fed Chair Yellen to stick to a generally dovish script when she gives her semi-annual testimony on Wednesday before the House Financial Services Committee.
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