Weekly Update: April 7, 2014

Spring Cleaning on Wall Street

A retracement of the recent gains is underway for the major averages amid divergent market forces that are weighing on equities this past week. While emerging markets have caught a fresh bid off of multi-month lows, the U.S. jobs data, although upbeat, have failed to top whisper numbers that were well above the 192,000 non-farm payrolls reported last Friday. The market was looking for something more along the lines of 220,000 jobs.

In addition, the wave of initial public offerings drew huge amounts of capital out of Nasdaq momentum names, thereby creating a large vacuum underneath the tech-heavy sector that spilled over into the S&P and Dow, pulling those averages back down to key technical support levels. Today's early follow-through to the downside comes in a market with few catalysts to turn sentiment around before earnings begin to roll in later this week.


Warmer Weather Should Heat Up Economy

Weekly Update: March 31, 2014

The first quarter of 2014 comes to a close today -- and to borrow a line from Jerry Garcia, 'What a long, strange trip it's been' about sums it up. The United States was pounded by the worst winter weather in the past generation. The 'January Effect' the bulls were betting heavily on never materialized. The Chinese juggernaut hit a GDP speed bump. Russia swallowed up Crimea before the first tip-off of March Madness. And the new Fed chair went off the rhetoric grid of 'Fed speak' and provided a timeline for when investors can expect short-term interest rates to rise.

As to how the market responded to these developments, it's almost a bonus that the S&P 500 is up by less than 1% three months into the year. Expectations were running high for a strong continuation of the 2013 rally, and that resumption of the primary uptrend could finally kick into gear this week as spring is finally here, so temperatures are on the rise that should foster increased business and consumer activity.


Cautious Optimism Defines Market Tone

Weekly Update: March 24, 2014

U.S. markets are getting off to a rough start this week, led by a major sell-off in the technology- and biotech-heavy Nasdaq. Anything with a price/earnings (P/E) ratio greater than 50 is seeing some stiff multiple contraction, no matter what the business model. Weaker manufacturing data out of China last night is contributing to the selling pressure and highlights what I've been noting for the past two weeks as the No. 1 concern for market sentiment.

Global equity markets were mixed this morning due to the fact that bad news for China's manufacturing will be good news for more stimulus. For instance, the HSBC Chinese flash PMI figure was released, coming in well below expectations at 48.1 versus 48.7 expected -- the third straight contraction in a row. And while the markets historically have taken a hit following results like this, the opposite happened, with the Shanghai gaining nearly 1%.


Green Screens On St. Patrick's Day

Weekly Update: March 17, 2014

Investors woke up to a strong opening for stocks on this St. Patrick's Day following the weekend events that culminated in Crimea voting to join Russia in that country's referendum. It was a shoe-in since the there was only one option to vote on the ballot, that being 'yes,' with no box to check off a 'no.' Talk about the fix being in. It makes the 'hanging chad' episode in Florida look almost above board.

Algorithmic program trading and massive short covering sent the S&P 500 right back up to technical resistance at 1,861 which, as of mid-day, is proving to be a line in the sand as Obama signs sanctions on primarily the ultra-rich Russian oligarchs and not something more sweeping that could hinder Europe.


Game of Russian Roulette in Ukraine Rattles Market

Weekly Update: March 3, 2014

Over the weekend, Russian armed forces comprised of 150,000 troops and 900 tanks massed along the eastern Ukrainian border in what has been described by the Russian government as 'military exercises.' That official statement went out the window this morning at 10 a.m. ET, when headlines crossed the tape that, according to the Ukrainian defense minister, the Russian fleet has given Ukrainian forces in Crimea until 10 p.m. ET to surrender or 'face a storm' (translated: forced invasion).

The fact that in the first hour of trading the Dow, S&P and Nasdaq were all lower by just 1%-1.5% is remarkable. Clearly, the steep losses overnight in Europe and Asia are not being carried over to U.S. markets and instead are actually cushioning the sell-side pressure as capital flows aggressively out of Europe, Asia and emerging markets into our markets, which are considered to be a much safer haven.


Market Treating All News as Good News

Weekly Update: February 24, 2014

Stocks are starting the week out on a highly bullish note; the S&P 500 crossed 1,850 for the first time, while the Dow and Nasdaq also pushed higher to support a broad advance. This comes after a G20 meeting over the weekend in which finance officials called for backing from central banks and private-sector infrastructure spending to spur world growth, which reassured emerging markets and set the tone for a positive open.

Additionally, the sudden collapse of the Ukrainian government and the U.S./EU bailout offered to that country also made for an event-filled weekend. That's all the bulls needed to hear to take the major averages north from the opening bell and extend the current rally to over 120 points for the S&P 500 in just two weeks. That index is registering a 6.6% gain from the 1,740 low from which the current rally began.