Market Comment - December 5

(Marco Bonelli) What a difference a few days make!

Almost every little headline out of Europe gets cheered and expectations run high ahead of the European Summit at the end of this week. Rumors also swirl whether the ECB might announce an official QE initiative at its meeting this Thursday. Talks about a year-end rally slowly become consensus and better than expected economic data in the US almost completely erase economic concerns around the world.


Given that scenario, an almost flat close on Friday after a strong opening was quite disappointing but Friday's trading session could still be put into the consolidating-the-gains-from-Wednesday corner as market participants obviously needed the weekend to cheer themselves up again.

Although the SPX and Nasdaq  Composite never made it up to their 200day MA, the Dow Jones and NDX managed to stay above the same levels while market breadth on NYSE and Nasdaq remained relatively strong throughout the day, despite the intraday reversal.

So where is the negative? Sorry, what was the question - I see the Dow Jones and NDX up 3.8% for the year, the SPX and Nasdaq Composite will flip back to a positive year-to-date performance this morning, I don't know exactly where the problem is!

Anyway, as the economic calendar will be light this week (beside the November ISM Non-Manufacturing Composite and the October Factory Orders later today) the game of the week will - once again - come down to sentiment and whether the already sharply higher expectations will be met. In general, the market should better avoid repeating reversals like last Friday as the impression will easily come up that the rally runs or already ran out of steam.

Trade well.


(Marco Bonelli is the Managing Director of International for CL King & Associates in New York. The opinions expressed are his own)