2-14-2012
We had a solid day yesterday on the heels of the Greek parliament passing the austerity measures required by the EU (and Germany). And the internals weren’t too strong to worry about a “blow off” top. Good news!
Why is this good news do you ask? Because for the Greek austerity to be passed, one would think you would have a stronger Up Day. But Up Volume was 77% on the NYSE and just 69% on the NASDAQ. Total volume was down across the board. So we did not get a “blow off” top.
Investors are probably still just waiting for the EU to formally pass the next tranche for Greece on Wednesday. Also, there was hardly any economic data or earnings reports yesterday.
The markets continue to be “overbought” by most technical indicators. We are, and have been, due for a pullback. Any pullback will likely be shallow as the supply/demand picture is still positive for stocks.
Moody’s downgraded Spain and Portugal late in the afternoon yesterday, along with Slovakia, Slovenia, and Malta. They went on to say that France and Britain may be stripped of their AAA ratings.
As a result, the Asian equity markets (Monday 10:20 p.m. CST) are down in overnight trading. Silver, gold, and oil are also giving back some of their recent gains. The US dollar is up against all 3 major currencies, the Yen, Pound, and Euro.
Our US equity futures are moderately in the red. The DOW futures are down 15 points, and the NASDAQ and S&P futures are down 1 point each.
The economic data out today include the NFIB Small Business Optimism, the Import Price Index, and Retail Sales. We have 11 companies reporting on the S&P today. They include Goodyear (GT) and Watson Pharmaceuticals (WPI) in pre-market, and Host Hotels & Resorts (HST) and Avon (AVP) during market hours. Finally, in after-hours, we have MetLife (MET).
In the broader market, we have Zebra Technologies (ZBRA) and Fossil (FOSL) in pre-market, and Weight Watchers (WTW) during the regular trading session. After hours, American Capital (ACAS) and Arch Capital Group (ACGL) report earnings.
Again, it looks as if any pullback will be shallow. And, I expect a resumption of the rally on Wednesday if they finalize the Greek deal.
