In the eyes of Wall Street these days, good news is seemingly bad for stocks as it increases the likelihood the Federal Reserve will begin to scale back on its asset purchases. The concern is that absent that monetary support, stocks will come under pressure. Yesterday’s release of the Institute for Supply Management’s (ISM) November Purchasing Managers Index (PMI), which came in better than expected and at its highest level since April 2011, bolstered suspicions the Fed will soon begin tapering its quantitative easing program. Read more about Good, Bad and Indifferent 12-03-13
In recent weeks, the markets has continued their push higher, although yesterday the S&P 500 fell a little (0.1 percent), capping a strong seven-week rally. The decline, albeit small, is notable, as it indicates that the rally could be exhausting itself.
The internal action of the last week also suggests that the rally may be due for a pause. While the bulls seem to have the upper hand, declining issues on the New York Stock Exchange last week outpaced advancing issues, albeit by a small margin (1,718 decliners to 1,484 advances, with 42 issues unchanged). Read more about Markets Slowing in Advance of Holiday 11-26-13
In recent weeks we’ve voiced our concerns that the stock market is over-bought and vulnerable to a modest correction. So far, we’ve been proved wrong as the Dow Industrials and S&P 500 have climbed to new highs, for the first time inching past 16,000 and 1,800, respectively. But despite the additional gains stocks have tacked on in recent sessions our view remains unchanged: a small correction could begin at any time. Read more about Window Shopping Trades 11-19-13
Call it a slow-motion shakeout. While the blue chip averages – the Dow Industrials and S&P 500 – are hovering close to their highs (the Dow actually closed at a new high yesterday), the rest of the market has begun to rollover. Whether it’s the tech shares that dominate the Nasdaq 100, the S&P mid caps, or the small caps that comprise the Russell 2000, the broader market is displaying signs of weakening. Read more about Waiting for a Modest Dip, Concerned About a Larger One 11-12-13
Stocks appear to have run out of gas concurrent with the Federal Reserve releasing its latest policy statement last week, in which the central bank maintained the status quo with respect to quantitative easing. This is typical “sell the news” kind of action, although it’s happening in slow motion. Read more about Selling the News, in Leisurely Fashion 11-05-13