The Market?
This is going to be a nice day. Although on a personal level I still feel like something the Cat drug in, in market land things are all aligned for another up day. Why do I say that? They have proven beyond a shadow of a doubt they are going to ignore anything that comes down the pike, until, they just don't. When that "don't " is, is anyone's guess. (Soon, like around the elections is our guess)
Here's why I say that. Yesterday we had the homes sales number. Here's a quote about them " The median price of a single-family home fell to $219,800 last month, a drop of 2.5 percent from the price in September 2005. That was the biggest year-over-year price decline in records going back nearly four decades" So, we saw the single biggest instrument of wealth creation in this country falling faster/harder than at any time in 40 years, but the DOW ended the day green. No worries mate.
When they are in that sort of mode, it's awful hard to go against the flow, The market has the momentum, and all these fundies and hedgies want to show off a big fat profit for the year, so they are buying. Add in the Election hype, the FED liquidity ( last week the difference between the repo's and dollars expiring, was over 26 billion) and we can see them ignore earnings warnings, and home sales.
That's not to say they don't have some reasons to be happy. There's no doubt that "some" earnings are actually quite good. But it's sort of interesting how they play this game. I haven't done solid research on it, but I'd be willing to bet a beer or two that more than half the companies that are beating the numbers are doing it on less revenues and/or less net than last years comps. Over and over we see it, "XYZ posts 54 vs 62, beats Reuters by 2 cents" See, they made less than last year, but because estimates were set low, they beat the estimates. We see a lot of that, a whole lot.
On the other hand there are the GSK's of the world and they are doing well. I'm not saying there's no one doing well, just not as many as Wall Street would have you believe.
We do get a slew ( is a slew more than a gaggle?) of economic reports this am, from Durable goods, to initial jobless claims to the help wanted index, to new home sales and the natural gas numbers. As much as you should be able to say that they will influence the day, the fact is they won't. Huh? That's right, they just won't. The market isn't running on basics of fundamentals, it's running on hype, and momentum. They'll pay the numbers lip service, but they won't mean anything.
So, do we have a fearless forecast for the day? Sure. I think today's going to be an interesting path to green. I think they jump us out of the gate quickly, then we pull back. Finally they come back in late in the day and we go green again. It just feels that way
AI
