Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
For the upteempth time in the past 2+ years we wake up to a Greek rescue. I’ll spare you the details as you can find them on a myriad of websites, but let us be sure we’ll be circling back to this topic for yet another spin in the not too distant future. But if you insist here is a Reuters story on the topic.
Euro zone finance ministers sealed a 130-billion-euro ($172 billion) bailout for Greece on Tuesday to avert a chaotic default next month after forcing Athens to commit to unpopular cuts and private bondholders to accept deeper losses. The agreement was hailed as a step forward for Greece, but doubts immediately emerged as to whether it would do much more than deal with its most pressing debt problems. Greece will need more help if it is to bring its debts down to the level envisaged in the bailout and will remain “accident prone” in coming years, according to a deeply pessimistic report by international experts obtained by Reuters.
In terms of market reaction we have a big yawn as this seemed baked in the cards for quite a few weeks.
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Looking ahead we are about finished up with the lion’s share of S&P 500 companies reporting (90%..ish) and it’s been a surprisingly poor earnings season when we realize (a) we are comparing to the always easy analysts expectations which are built to be “beat” at a typical 70% rate and (b) earnings expectations were slashed dramatically in December as the market belief was a good chance of recession and/or a major drag from Europe. So even with those lowered figures, the beat rate is 54%. Even more surprisingly – the market could care less. In one of the worst earnings seasons RELATIVE to expectations in recent memory the market has had one of its most teflon moments. And this is why the market is always a challenge…
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On the economic front the market seems to not really care about much anymore other than the ISM figures and employment data the first week of the month; almost all other data point cause a reaction measured at most in hours (if not minutes) and then we return to buy buy buy. Bad news, good news, or no news. This week the only economic data that could make the market notice for a few minutes before more buying of stocks continues is existing home sales Wednesday (estimates 4.69M annual), and new home sales Friday (estimates 315K annual). As always existing home sales have a much broader impact on the economy, while new home sales (although much smaller) impact jobs more. A consumer confidence report from U of M, also hits Friday morning – which should soon be affected by rising gas prices.
Let’s finish off with a few charts. Of the major indexes, the S&P 500 blew thru one of two remaining resistances in the 1350s last week – and only has the high of 2011 left to go (1370).
The NASDAQ has been on a rampage with Apple of course leading the way, but help from pals such as Microsoft – and is far above 2011 highs.
Meanwhile, the Russell 2000 is still a ways away from 2011 highs.
Two other charts of note this week – and perhaps related. Wednesday when Apple reversed sharply we could also see a lot of (relative) weakness in the transports. Of course like everything there was a big rally Thursday which confused most of us who expected a huge red candle (“chart talk”) in Apple to actually matter, but again relative weakness Friday in a flattish tape.
Is this weakness related to oil, whose chart is firming up?
And when does the potential of $4.25ish type gasoline in a few months begin to matter to the market?
Other than that there really is not much to speak of in the market nowadays – it has become mind numbing in repetition. There are no real dips, no pullbacks (no -1% days on the S&P 500 this year), relatively weak earnings don’t matter, and all is well as long as central banks have your back. Speaking of we have another ECB LTRO program (this one bandied about as potentially twice as big as the last one) coming next week.
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Any securities mentioned on this page are not held by the author in his personal portfolio. Securities mentioned may or may not be held by the author in the mutual fund he manages, the Paladin Long Short Fund (PALFX). For a list of the aforementioned fund’s holdings at the end of the prior quarter, visit the Paladin Funds website at http://www.paladinfunds.com/holdings/blog
