Wal-Mart beat estimates and raised guidance.
That's today's story. The market needed some reason to turn around and, for now, we'll even join in celebrating the fact that people are flocking to the lowest priced place to shop, as if that's a sign of economic health. It remains to be seen how much of these sales were cannibalized from competitors but, for now, any excuse will do if it can break us back over 13,100.
We're going to stay on plan until we start regaining some footholds on the Big Chart as nothing fundamental has changed in the economy, this is just a case of retail (HD was so-so) exceeding exceedingly low expectations. David did a "shopping poll" yesterday and the results were mixed, it would be nice to gather more data this week from our members so I'm going to make a post for retail reports where we can gather our findings!
We're not going to go crazy on today's action (it looks like we're off to a good open at least) but there sure are plenty of things on our buy list if we can get a few break ups (which, if you'll remember from last Tuesday, is hard to do – and now you know, you know that it's true…). We don't have a very high bar for the week, we are looking to retake "Must Hold" levels of 1,470 on the S&P, 2,800 on the Transports, 480 on the SOX (one can always dream!) and 810 on the Russell.
Breaking up was hard to do for the Nikkei, even though Japan got some good economic news as the economy grew 0.6% in Q3. It was Japan's leading economic indicators at 0% last week that was one of the primary causes of the shift in International sentiment but trade data was much better than expected and the overall GDP is on pace for 2.6% annual growth, a very sharp reversal from the 1.9% decline that was projected in Q2. Yen weakness boosted exports to Europe and kept exports to the weak US alive. Not surprisingly, the BOJ voted today to hold rates steady at 0.5% as well, breathing another shot of life into the carry trade.
Nonetheless, the Nikkei fell another 70 points on the day after bouncing off even twice. We do need the Nikkei to at least pretend to rally if we want to get the global markets back on track. Hong Kong pulled back off an 800-point drop to finish up 137 for the day as whatever it is they have for lunch over there should be prescribed to US traders! Shanghai also continued to fall but a very mild 1/2-point move but we'll take any non-selling as a good sign.
Poor Bhutto is back under house arrest and inflation in China is up to 6.5% so keep in mind that nothing is getting better and we really do need to see some serious levels being held before we jump on board and start buying. GS got the go ahead to buy 12% of Chengdu Yangzhiguang Industrial Co., a very big step after 2 other deals failed. YHOO signed up to provide mobile Internet to 9 Asian mobile service providers as their Chinese base begins to pay dividends.
Europe is trading flat ahead of the US open but VOD beat and raised guidance, which is good as they dominate those markets. Airbus got a lot of orders from Dubai yesterday, which cheered them up as well.
Back home, now that C has pointed their finger at ETFC and caused a stir, the bank is trying to quietly announced the reorganization of their own investment banking unit, who ACTUALLY DID LOSE $5Bn+ (so far!) as opposed to the fantasy losses they have accused ETrade of hiding.
We need to enter today's trading without prejudice – of course we'd love to see a nice rebound (after all, we have December contracts to sell!) but it will take more than a brief visit to 13,300 to get us back on the bull train but it would also be nice to see money continue to move our of energy and other commodities and moving into more productive areas of our economy. The dollar had a big bounce yesterday off the lows of 74.98 on Friday and sits back at my 76 mark so we'll see if we can establish a floor there. Gold took a nice bounce off $800 but needs to properly test it before we uncover our mining plays.
Oil is not hitting $100 and probably won't in the near future and, as the December contracts draw to a close with 298M $93.82 barrels still open for December delivery (and 316M already on order in January) it may be carnage at the NYMEX with less than 5 trading days left to dump those barrels! After January, there are 90M open barrels in February and 88M open barrels in March and 51M open barrels in April (just $91.19 in April). January contracts are already a dollar below December so someone is going to lose $300M on this roll and that will be another $300M down the drain for every dollar you see oil fall this week so let's get some chips and dip and enjoy the show!
Have fun today, things are looking up!
