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Courtesy of David Brown, Chief Market Strategist, Sabrient
I am an optimist at heart and a nearly perpetual Bull when it comes to the market, but the pressure finally got to me–the troubles in Europe, the obstinacy of our Congress, and mostly negative economic results–all this finally turned me into a semi-Bear last Monday with my “Bah Humbug” warning that there is no Santa Claus and the Grinch might well steal Christmas.
That only goes to prove the Wall Street adage that when the last of the bulls give up, it’s time for the market to rally.
And indeed it did.
Large cap Value led the rally last week, up +4.4%, while Large-cap Growth, up a healthy + 3.3%, came in last. The rest of the style-caps were up between 3% and 4%, albeit on low volume.
From a sector viewpoint, Energy was the best performer, up +4.9%, and Technology was the worst, up just +1.9%. Apparently, Technology was still suffering a hangover fromOracle’s disappointing earnings report. (And to add insult to injury, Oracle lost its patent case today against Google).
Click here for market stats.
Wall Street adage aside, my capitulation to the Bears didn’t create this Bullish run. It was the good news from economic front lines that drove the rally.
Virtually every economic release of the week beat the consensus estimates, including Jobless Claims, Michigan Sentiment Index; Leading Economic Indicators (LEI); and Durable Goods. Add to that the grand slam by the housing industry, with Housing Starts, Housing Permits, New Home Sales, and even Existing Home Sales, all beating their prior readings–and except for Existing Home Sales, all handily beat consensus estimates. This morning’s Consumer Confidence Report came in at 64.5, well above the expected 59 and last month’s reading of 55.2.
The week brought more good news from Europe. Spanish bonds got a visit from Santa and sold well below expected yields. The European Central Bank handed out considerably more money than had been anticipated, although this could be viewed positively or negatively–positive that they did it, or negative that they needed to do it.
Politically, our Grinch-like Congress managed to get into the Christmas spirit long enough to eke out a two-month extension of the payroll tax cuts and unemployment…
