Courtesy of Scott Martindale, Sabrient Systems and Gradient Analytics
After experiencing by far its worst day of 2012, the market quickly turned back up as bulls told the market, “Thanks for the entry point!” In this bullish environment, there have been few pullbacks from which to gain a better entry price on new positions. The accumulation has been unabated. So Tuesday’s weakness was greeted as a long-awaited opportunity to buy on Wednesday. The question remains, however — is that all the pullback we’re going to get?
Without increased trading volume, bulls were just too undermanned to push through resistance levels of 13,000 on the Dow, 3,000 on the Nasdaq, and 2011 highs on the S&P 500. Riskier indexes like the Russell 2000 have fallen the hardest–but of course they were the ones that had been rising the fastest. Not surprisingly, weakness in stocks has coincided with strength in the dollar.
Wednesday’s bounce was attributed to a variety of positive events. First, ADP payrolls data was strong, giving optimism about Friday’s upcoming jobs report. Next, apparently the Fed is considering–as their latest incarnation of quant easing–printing dollars to buy long-term mortgage or Treasury bonds, and then borrowing it back for short periods at low rates, which would make it less likely to create inflation.
Furthermore, there was some optimism that Greece’s debt swap would be successful. Thursday is the deadline for bondholders of Greek debt to sign on to participate, so it could be a market-moving day. However, many of the debt holders remain skeptical that Greece will be able to pull off their austerity commitments. In fact, some expect that voters will install a new government that ultimately rescinds their commitments.
I think there might have been a Super Tuesday impact on the market, as well, since Mitt Romney is widely considered to be the candidate that gives Republicans their best chance at unseating President Obama. His victory in Ohio may have guaranteed him the nomination.
Among the 10 U.S. sector iShares, Materials (IYM) sold off hard on Tuesday, and it has been by far the weakest performer this week. Utilities (IDU) and Consumer Services (IYC) have held up the best. Financial (IYF) was the big leader on Wednesday, but only made up about half of its big -2.2% loss on Tuesday.
Let’s talk about Apple Inc. (AAPL). As expected, the juggernaut unveiled the newest version of…
