The day before yesterday, I read the excerpt below. Mind, you, I read this fellow’s take on the market every day and, mostly, I like what he has to say because it is thoughtful. I don’t always agree with his take, but I give him credit for reasoned thinking.
- We’ll give the bulls the benefit of the doubt for now. But, if the Dow closes below the new floor around 16,250 – basically this week’s lows – that’s going to be a punch the market won’t likely walk away from.
The reason I mention the above is that recently, the “analyst” has been suggesting, like many others, the market is top heavy. It seems every time the bears take a decent swing, these folks suggest more bad is coming and what always seem to happen as of late is the market responds with strong buying. Witness what has occurred the last two days in the market. Again, at least as long as the economic data coming in supports it, the reality is that strong selling will be counterpunched with strong buying. It is an up down market because the buying side is strategically waiting for the pullbacks. It is the best of all trading worlds.
Yesterday, I came across the following headline and it made me think about the retail sales report that came out yesterday as well.
- Retail Sales Move Higher, but Macy’s Layoffs Signal Caution
Macy’s is a department store in transition, no doubt about it, but what brick and mortar department store isn’t? True, these types of retail outlets are losing market share to online retailing, which makes their stores more expensive to operate, which means restructuring. So what? The consumer is still spending money, as seen in the retail sales report that came out yesterday. This is why the notion of the market taking a resounding step backwards is not on target, at least not yet.
Here is another reason a deep fall for the market is not imminent. The excerpt below is directly related to the positive retail sales report and it speaks pointedly to forward economic and market momentum.
- The Empire Manufacturing Index – one of the more closely watched indicators due to it being a current report – was reported at +12.51 in December. This was well above the consensus for a reading of +3.6, above last month’s +2.2, and the best level seen since May 2012.
It is all getting better out there and that is exactly what ultimately drives the market forward.
- The World Bank raised its global growth forecasts as the easing of austerity policies in advanced economies supports their recovery, boosting prospects for developing markets’ exports. The Washington-based lender sees the world economy expanding 3.2 percent this year, compared with a June projection of 3 percent and up from 2.4 percent in 2013.
Another sure sign of healthier economic conditions are what the big banks have to say regarding their activities. So far this week, so good.
- Bank of America Corp., the second-biggest U.S. lender, said fourth-quarter profit more than quadrupled as the company quelled claims tied to defective mortgages. The results beat Wall Street estimates.
Sure, showing a huge profit is good for the market, but what is more important is the fact that BofA is finally tidying up all the messiness from its, how shall I say it, less than honorable activities during the greed-driven era of the mid-2000s. As it does so, it will mean more money for investing, and since the new financial regulations prohibit much of the investing activity that got it in to trouble, the best course available to make more money is lending money. In short, acting like a bank is good for the economy and, ultimately, the market.
Trade in the day; Invest in your life …
