I leave you with these bullet points about how to buy a stock today in a Master Sun type montage of market thoughts to ponder during the weekend.
Bet on These Three Macro Adages:
1. ISM-manufacturing (Monday) delivers a modest rebound from the horrendous August showing and that recharges bulls based on pockets of life in regional manufacturing reports (employment and new orders) this week.
2. August employment report represented the bottom in the cycle soft patch.3. Pertaining to China's stimulus ambitions, where there is smoke, there is fire. Also Bet on These Five Market Interpretations of Data: 1. Anemic growth = no inflation = support for more Fed accommodation beyond the $40 billion or so already being stuffed into the system. 2. The notion of the market being oversold turns to one of opportunistic valuations, where hot sectors return to the good graces of the masses (financials, homebuilders, consumer discretionary). 3. Earnings warnings, given the return of euphoria, are largely ignored, which was counter to the reactions to Norfolk Southern (NSC) and Caterpillar (CAT). 4. EU debt risk flare recedes to the background again as the market overlooks the fact that although Spain is focusing on spending cuts instead of tax increases, there is still an issue of a structural growth headwind that causes recoupling. 5. The downward revisions to second quarter GDP and durable goods were backward looking and unreflective of the direction of the economy in the fourth quarter. Color me silly, but the hurdle rate to get long is rather high. I think the market has to hand over a few conclusive tells (and then we can bet on a couple of the items listed above, just on cheaper valuations), so in the meanwhile it's okay to err on the side of caution. Crystal Ball September same-store sales will be released next Thursday, and the retail sector is acting weaker than the broader market. A name that stands out in this regard is Target (TGT). There could be a disappointment factor lurking in the form of demand pull forward into August. I have liked how TJ Maxx (TJX) has traded compared to its peer group in the latter half of the week; confident the company will not be in the mix of retailers swept into any negative backstories that could develop from the day.
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