Daily Market Update – February 27, 2014 (9:30 AM)

Normally, you would think that on a day that has Durable Goods, Jobless Claims and Janet Yellen offering Congressional testimony it would be a potentially volatile day in the markets.

With some disappointment in those numbers one may also have expected a tenuous market to respond with some negativity, particularly since there’s little indication that the Federal Reserve might turn the “mother’s milk” spigot back on in response to single data points.

The problem is that makes use of rational thought and logic.

Instead, the past few days have seemed to be focused on different numbers and no emphasis on words relating to policy.

Specifically the market has simply cared about the intra-day high on the S&P 500 and the closing high.

Anything else happening during the day, such as earnings reports, served only as a means to bring the market closer to, or further away from those levels.

Technicians are jumping up and down telling everyone that will listen that if only you had looked at the charts you would have known that there would be this kind of resistance.at that level.

If the market had skyrocketed higher those same technicians would have been jumping up and down to tell anyone that would listen that if only you had looked at the charts you would have known that the market was set to explode at that level.

They’re right. You can have your cake and eat it, too.

For me, Thursdays just represent that time when you begin thinking about the coming week.

What past opportunities will come to their natural ends as the week comes to an end and which opportunities won’t, as well as which will go on to live yet another week, while earning their keep.

Whatever the answers to those questions may turn out to be, they then predicate thoughts for the coming week.

While still sitting on some cash and hopefully adding to it by tomorrow’s close, it would be nice to see some resolution around that 1850 level.

My expectation is that resolution will be on the higher side of 1850, but in the past comebacks from correction attempts there hasn’t been the slightest hesitancy in moving forward once that inflection point was reached. So far, this time is a little different and the resistance has been there, especially manifesting itself a few times this week with reversals that moved the market from above to below the magical 1850 level.

I’m not a technician and don’t place too much emphasis on that sort of thing, but it’s not likely that kind of behavior is coincidental. There are plenty of believers and their beliefs matter, particularly as a collective group.

While I usually hope to see alternating market moves, especially as the
y may contribute to volatility, for now, my hope is that the direction is just higher, but in moderation.

Moderate price moves in either direction are always good, especially when looking to make purchases, but lately the markets have been exhibiting lots of “all or none” kind of behavior and sustaining prices longer than in the past when the behavior has been in response to disappointment.

Retail is a good example and seems to be suddenly waking up after more than a quarter in deep slumber, with some very few exceptions. Never mind that the excitement over the numbers is related to significantly reduced expectations and comments like “losses weren’t as bad as expected.”

Imagine the response of retail stock share price if they actually had something good to report. Yet the sentiment has quickly changed, despite there not being tangible evidence that people are in a position to increase their discretionary spending.

Ultimately, whereas these sort of things used to matter, it’s not so clear that they any longer do.

Instead, looking forward a few days at a time and changing sentiment and outlook as often as the market does, seems to be an increasingly rational alternative to believing in the sustained rational behavior of the market and the people that guide its movements.

 

 

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