(Marco Bonelli) It's always easy to blame others!
Sure, let's point fingers to the European crisis, the strong US Dollar and rising Spanish Bond yield instead of acknowledging that the stock market may have gotten ahead of itself!
And let's use the same reasons many blamed for yesterday's sell-off, focus on the reverse development in each case and add "great" AA earnings to the equation to explain why stocks will move higher today instead of simply talking about the chance of a technical rebound after five consecutive down days!
Beside that, it was very interesting to follow the excitement of AAPL reaching $600Bln market-cap and until the SPX dropped below a critical technical support at 1370.50, AAPL's performance was way more important than a weak NFIB Report (Small Business Confidence) for March, a sharp slow-down of Chinese imports or very weak manufacturing data for February across all Europe.
Worth noting was yesterday's downside reversal of the Nasdaq which ended in an underperformance versus the Dow Jones and SPX but still shy of the 2% plus losses of the small-/ mid-cap sector (Russell 2000 and S&P 400 Mid-Cap) and the broad Value Line Index. In addition, recently strong sectors like banks, media, retail, hotel/ restaurants, some consumer staples (like beverages) and homebuilding saw their first considerably weak day.
The last five trading days may have been the start of the recognition of fundamental reality and the subsequent adjustment of prices to fundamental reality. If that's the case, it will be a gradual process (and not the widely discussed short-term 5 to 7% correction!) as the few well-known bullish arguments continue to be in play, which bullish investors will embrace for a while until the shadow of the real fundamental picture turns out to be too dominant.
For today, some technical supports (1356.50 for the SPX but also the March lows for the RUY, MID and VGY, that all closed slightly below), artificial excitement following the AA conference call (AA versus most other weaker global macro-economic data) and the usual crash-guru predictions may lead to an initial technical rebound, but I wouldn't bet that this will last into the close.
Trade well.
(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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