Interestingly, stocks opened weakly following the Greek election results Wall Street wanted. The pro-bailout party squeaked into the winner’s circle, and stocks are going to be limp at the open. What gives?
Things are upside down right now, Wall Street wants its welfare from the Federal Reserve. In order to get the free cheese, bad is good and good is bad. The street was rife with rumors of a massive, coordinated money printing splurge from the world’s central banks if the Greeks voted the wrong way; bad is good.
Now that the results are in, and the “good guy” has won, the bankers will have to find another reason to ramp up the rpms, and that’s bad as far as the computer models are concerned.
That leaves the state of the US economy as the reaming hope for “bad is good” to get mo’ free digital fed dollars. Top Equity News readers have probably noticed, with the exception of the Employment Situation Report, equities and the news flow have had an inverse relationship. When the news is bad, like almost off of it has been in the last two weeks, stocks go up. Once again, bad is good.
While all the news, rumors and market action were pointing to higher prices, TEN’s market meters surprised us on the weekend. When we plugged in the numbers, some of our buy readings turned to sell, while the bearish measurements remained unchanged. Two of our three models say sell, while the fourth is stuck on hold.
Meanwhile, Top Equity believes the NASDAQ’s chart looks fairly bullish, The index managed to get beyond a lid that’s been holding it back, volume is rising, and its MACD line is no longer underwater. Minus our models, it sure appears as if the NASDAQ’s destiny is its 50-day average of 2924.
That’s why TEN was surprised this morning after wiping the sandman’s work from the eyes and turning the computer on to see stocks might slide at the open. We forgot that the market is upside down right now; however, Ben Bernanke will get a chance to straighten things out on Wednesday afternoon when the FOMC releases their policy statement.
Our guess is that the Chairman and the Board will do nothing, maybe loosen the language a bit, but that’s it. Why in the world would the fed take any action when the power of rumor can create the desired effect?
The mixed up signals and down is up nature of the market means investors should be cautious right now. The gains are not built on bedrock. No, they have been constructed on sand. A strong wind could come and blow the green away in just a day or two.
Top Equity News would rather see solid company and economic fundamentals driving prices higher than rumors and hopes for easy money. In a couple of weeks, 2nd quarter earnings will start to come out. Maybe profits can get Wall Street back on solid footing; however, earnings will have to overcome a strong dollar.
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