There is an old saying among brokers, buy the rumor and sell the news. Last week was filled with rumors and Wall Street bought, bought, and bought some more.
The first rumor was the Germans might cave in on Eurobonds and that the European Central Bank would print, print, and print some more to save Greece, Spain and the rest of the Union from disaster.
On the weekend, investors got the news, $100 billion or more (it will be more and more than once) to bailout Spain’s failing banking system.
Rumor number two was the China would announce major stimulus to prevent a hard landing as its economy’s nose is pointed straight at the ground.
The hype was answered with a rate cut, but no new spending spree as the Chinese government squashed international hopes by saying that’s it.
Finally, with Ben Bernanke testifying on the hill, Wall Street expected to hear about round four of Wall Street welfare. Surely the chairmen had to know about the lack of jobs and steadily declining economic reports. Nope, Bernanke says the economy is just fine and improved somewhat in April and May, no more free digital dollars for the starch collar crowd.
The computer models bought the rumors, now that all of the news is out, will they put it in reverse and take some money and profits out of the market? So far this morning, pre-market futures have reacted positively to the Spain news and are up handsomely, but off their high.
In reviewing the index charts, Top Equity News noticed that the Dow, NASDAQ, and S&P had two major themes in common; they closed Friday at their respective 26-day moving averages and volume dropped as stocks rocked.
In our view, price without volume is a sign of a counter move within the current trend. In this case, a relief rally inside a down trend. In case you are wondering, TEN believes the indexes’ respective 50-day averages are the max moves without volume joining in, 2950, 1350, and 12,700-12,800 for the NASDAQ, S&P, and Dow, respectively.
With three reports on the health of the consumer scheduled for Wednesday, Thursday, and Friday of this week, the residual effect of the rumor to reaction cycle will run into the hard reality of news.
With the state of the jobs market breeding insecurity, Top Equity believes the odds are the consumer will be shopping for discounts, less comfortable, and less confident. It’s a prescription that could bring unwanted side effects.
We will know for sure by Friday. Right now it’s all just rumors, let the buying begin.
Stock Market Trends: After Buying Rumors, What Comes With the News? is an article from: 
