(Marco Bonelli) Setting aside the fact that any proposal or "plan" coming out of one of the countless official and unofficial Kindergarten - meetings between European "leaders" has to be revised in a few weeks or months because the European economies are in a state between sharp deceleration and implosion, let's just hope that at least something intelligent and slightly productive comes out from this weekend's wine & dine EU Summit!
(Needless to say that the approval of further austerity measures by the Greek parliament last night is useless and not even worth the paper it's printed on.)
The stock market continues to look at the positive, looks for slightly positive news in between the negative headlines, looks to interpret and talk negative news positive and even looks to ignore the negative, which is fine as long as no really new news or substantially worse news emerges.
Yesterday, October's Philadelphia Fed Index showed an unexpected rise in sentiment for the regional manufacturing sector. Again, this is one of the many sentiment surveys that don't necessarily reflect the real trends, nevertheless, the new order, shipments and average workweek sub-components moved up the most, while employment and inventories declined substantially. In other words, so far news from the macro economic front still supports the market's perception.
Without any big noise, financials showed some relative strength and even turned out to be on the top of the sector leader board yesterday. Investors know about the quarterly results of the large financial corporations and mostly disappointing numbers was less seen as a disappointment but more as "it cannot get a lot worse" and most stocks got bought. In the meantime a few regional banks and financial institutions reported surprisingly positive numbers. Last night COF and AXP also added positive headlines to the sector. Financials as a leading sector is usually positive for over market.
So overall and looking beyond the wild swings in currencies and commodities and all rumors and comments, it could turn out to be a positive day with a mix of hopeful optimism going into the weekend and taking some bets off the table (because you never know...). Short-term, 12000 in the Dow Jones and 1250/1260 in the SPX continues to be possible but everything gets re-evaluated next week.
Trade well and have a great weekend.
(Marco Bonelli is the Managing Director of International for CL King & Associates in New York. The opinions expressed are his own)
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