The Most Important Voter in the European Union
The market finished higher yesterday despite a bearish open. Volume was low for a second session in a row, which is unusual given the huge price move over the past three days. But, the low volume hasn't impacted the bulls.
Despite low volume and ongoing bearish headlines the bulls continue to jack the market higher. Yesterday buyers protected the 1175 area and challenged 1197 resistance all session. Although the bulls were unable to break through SPX resistance at 1197, they didn't lose any ground in the process. And today, buyers are in an excellent position to break past all short term resistance zones.
Buyers are clearly pricing in positive news from Europe. And industrial production for the eurozone did come in at 1.2%, that was ahead of a 0.7% decline expected by the experts. But the real positive news the market wants is a vote of approval for a bailout package.
The country of Slovakia needs to pass an approval for the eurozone to expand its current program designed to bring stability in the financial system.
Basically, it's Europe's TARP. But unlike the U.S. where Bennie and the Feds have supreme control, the eurozone needs numerous votes to approve its monetary programs.
The market wants to see Slovakia vote to approve the plan. Yesterday Slovakia voted against the plan. But there will be another vote soon, and the mere prospect of a nod of approval for the eurozone plan sent the indices higher despite the weak numbers from Alcoa (NYSE: AA).
Last night, earnings season officially began, and Alcoa did not impress. Although Alcoa beat the analyst's revenue estimates, low aluminum prices hurt net income. Analyst expected $0.22 EPS from Alcoa, but it was only able to record $172 million or $0.15 EPS for the third quarter this year.
Alcoa does not expect demand deterioration for the remainder of the year, except in Europe.
The auto and trucking segment posted great gains. And Asia, especially China, remains a hot area for business growth - Alcoa expects India to make a big recovery as well over the next few quarters, which should help the SLT trade we took at $8.59.
The bulls will have help this morning from the Asian indices which were up last night. The indices in China and India led the push higher and each was up 3% last night. Also, Europe's indices trade with gains this morning of nearly one percent.
But let's be careful today; Ben Bernanke talks after the FOMC minutes are released this afternoon. And lately the market is usually more inclined to turn lower when Ben Bernanke speaks.
The market participants will be searching for more insight into the loosening monetary policy announced last month and the unexpected decision to reinvest assets into mortgage backed securities. The minutes will also key us into the diverging views (if any) tied to easing and the U.S. inflation outlook.
