Under normal market conditions, something this market hasn’t seen in two years, I would anticipate selling pressure after a round of good quarterly earnings. After the reports, the market reverts to everyday headline drivers as opposed to everyday headlines plus earnings headlines to spice things up. The driver during reporting season are the report results themselves.
This time around, after all these good quarterly announcements have been priced in, on top of, or in addition to, the QE2 driver, I have to ask myself where is the next market driver coming from? Absent something yet unknown, I believe the driver will continue to be the dollar and the potential for the bank/foreclosure situation to run out of control as ongoing driver(s). But with the Fed so blatantly propping up the criminal banks, we know that no matter how far down they go based on headlines, they will come back… they must for the market to advance. They must because capitalism isn’t much good without fresh capital being formed, financed, and handed out by the very banks we love to hate.
This QE2 expectation that the market will selloff on the news is possible, but hugely expected moves have a habit of disappointing. In other words, since everyone seems to expect the selloff, it’s becoming too obvious that it should play out that way. If it’s so obvious, shouldn’t the market be selling off harder as we approach Nov. 3? Nonetheless, I am on the short side of that trade at this point.
Just to underscore the many, many cross-currents playing out in this market next week: this Friday ends the fiscal year for mutual funds to determine capital gains. If funds sell big winners — like Apple — this week, and then there’s a big selloff in the next two months, investors get hit with a tax (this year) and then also losses. If winners are sold next week, the taxes are deferred for another year.
•Fed Asks Dealers to Estimate Scale, Impact of Central Bank Bond Purchases < Bernanke is now simply asking Wall Street how much stimulus it wants.
•Stocks, U.S. Futures Advance on Raised Earnings Forecasts; Dollar Weakens
Another week of substantial improvement in jobless claims would point to tangible payroll gains for the employment report.
Jobless Claims8:30 AM ET … claims for the week of October 23 are expected to come in at 455,000; actually came in at 434,000, a plus for the morning action anyway.
EIA Natural Gas Report10:30 AM ET
7-Yr Note Auction1:00 PM ET
The S&P 500 dropped roughly 25 points intraday Monday through Wednesday, but on a closing basis has lost three points in that time. This is merely a continuation of the choppy October consolidation, with no technical damage done, as it continues to hold above its August-October trendline and 10-day exponential moving average on a closing basis. For the very short term, if the S&P can maintainabove 1177/1176, it remains in position for follow-through gains. Resistance above is in the 1187/1189 zone, with a minor barrier at 1191 prior to this week's multi-month high (1196).
This article just makes me want to make as many deflated dollars as I can so as to buy real estate in the future: http://www.businessinsider.com/15-signs-that-the-us-housing-market-is-headed-for-complete-and-total-collapse-2010-8. One could say there's a problem in there somewhere! http://www.businessinsider.com/the-15-states-with-the-most-underwater-homes-2010-7#idaho-227-of-mortgages-underwater-1 Mind boggling!!
By the way, I'm one of those people who so far has managed to get through life without every owning any Apple product, no matter how much Steve Jobs says I need his trinkets. I don't need their ianything. Here is what can happen to the Apple cultists: http://www.foxnews.com/scitech/2010/10/27/time-traveler-spied-chaplin-film/?test=faces. Maybe if some of those folks in the foreclosed homes mentioned above had not listened to Steve Jobs, they could have stayed out of foreclosure… calling your bankruptcy lawyer on your iphone while watching your ipad, earbuds protruding from your head listening to your ipod just doesn't seem right.
There is nothing normal about this market.
Tags: bank crisis, foreclosure, housing, housing crisis, Stock Market, trading stocks
