Buyers Flood the Stores
The market declined last week, but those losses were
contained to under 1%. Heading into last week I expected a pullback with
a maximum decline to 1155. The SPX only fell as low as 1175 support
(twice) before settling higher.
In addition to the recent decline, the SPX has encountered strong
resistance near 1200, but the bears need to act quickly. While it makes
sense for the market to decline further (it has risen for the past 3
months) the bears look exhausted. The bears were able to muster up a nice
3% drop a few weeks ago, but sellers could not drive prices lower since.
And the bears have had every excuse in the book to take the market
lower.
First, everyone is looking for a pull back. No one actually wants
to buy after a 15% rally in two months. Second, the economic data from
last week stunk. Does anyone else remember the massive decline from
durables. Finally, do I even need to bring up Greece, Ireland, Portugal
or Spain. Worries from Europe have the power to take the market lower
through fear, or a rise in the dollar, or both. Yet, the bears could only
manage a 0.80% decline with "Debt Crisis In Europe" as headlines all
week.
The bears were back in the
saddle again today, but once again the bulls protected support.
Until bears prove their ability to take out a
meaningful area of support, I have to believe the bulls will come back
and take the market higher.
The big news from the weekend was the consumer spending numbers,
but quite honestly I do not pay close attention to them. The economic
calendar was light today, although it picks up tomorrow with Case Shiller
and Chicago PMI.
From Wednesday through the end of the week, the big story will be
employment data, and there will be no shortage of it. Employment data has
steadily beaten expectations, albeit barely, to the upside over the past
few weeks. Anything less than expectations this week should be viewed as
bearish. As well as employment data, we also receive scattered reports
from the service sector and the Fed's Beige book on
Wednesday.
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