- A good day. Not sure if this qualifies as a follow-thru day but close. On the 21st we had a big move up in the averages and traders like to see a follow thru, on big volume, within the following fourth trading day. Today didn’t have the volume to make it a classic follow thru but I’ll take it.
- Earnings announcements were less bad than expected so the earnings abyss that traders were not prepared to look beyond ten days ago has narrowed.
- Banks have had a heck of a run. Bank America has gained 21% from its intra-day lows five days ago. Goldman is up 23%.
- Don’t want to read too much into the last several days but the S&P is above 845, a pretty good move. The challenge will be to go through it and close well above. All 3-G’s were up; Goldman, GE and Google. After the close, however, Moody’s put GE on its watch list for possible ratings downgrade and GE shares gave up its 5% gain. But bank stocks, after the close, rose even more. On balance this yin and yang smells like positive news for the market.
- Stealth moves like the last few days can be a prelude to something bigger. However, with such an event-driven market caution is warranted. The stimulus package is slowing down in the House, for example, as Minority Leader Boehner flexes his muscles. We can also expect announcements from Davos. And we have hundreds of companies yet to report this week.
- If we can break and hold 850 then some sideline money, of which there are trillions, may be put to work.
Have a wonderful evening!
