The Day Ahead: And, Suddenly, the Sky Is Falling
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Wow, if I didn't know any better I'd think the stock market was headed for an epic crash. Is the sky suddenly about to fall? These are just few of the thoughts that I gathered from sniffing around the market Monday. I am no whacked-out bull, but the tone of some pros was certainly interesting. It was almost as if they'd banded together in a closed-door weekend meeting and agreed to scare the weak hands, and then nibble at what those hands have dropped. Buy when everyone else is fearful and sell when there is a buying orgy, right? (This, of course, was in evidence after the Fed's announcement of a third round of quantitative easing.)
- Stocks that broke out going into the Fed announcement, such as retailers, are giving back the gap higher. Volume is key.
- The market is responding more negatively to "disturbing" reads on the macroeconomic front. I think the Empire State index was "disturbing" for these reasons: (1) it was worse off a disappointing prior-month figure; (2) new orders remain soft; (3) employment was weak, thus fanning the flame of the idea that the Fed is unable to help; and (4) inflation expectations were up relative to slowing growth and amid the new Fed action. Although this report stank, the market did not get itself into a selling tizzy, which would be seen in across-the-board selling.
- A bellwether company in FedEx (FDX) has downplayed the impact of QE3, has lowered growth estimates and has cast a dark cloud over non-transport stocks -- for example, Amazon (AMZN).