(By Jordan Kahn) Yesterday I said that the market looked solid with the SPX testing its 200-day but that I needed to see a strong close for stocks in order to get more constructive. Lo and behold the market sold off again at the end of the day and finished weak. That has been the pattern for over a week, and we need to see that change.
This morning the market opened slightly higher, but quickly turned tail and moved into negative territory. Obama is coming on TV soon, and if he is bearish about the fiscal cliff prospects stocks could sell off further. But if he is optimistic in his tone then maybe we will see a strong finish to stocks which could unleash a further short-term bounce in the market.
Asian markets were mostly higher overnight as China's Party Congress concluded its leadership transition.
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Europe is lower today after Greece reported a -7.2% drop in Q3 GDP. Ouch. Workers in France, Spain, Italy, and Portugal are demonstrating against budget cuts. And industrial orders in Spain declined -5.7%.
In the US, retail sales declined -0.3%, but were unchanged if you exclude autos.
The Nasdaq is down less than the S&P right now after Cisco (CSCO) reported solid earnings and its stock is 7% higher. Facebook is also up 8% despite the large share lockup expiration that is occurring today. This could imply a short-term bottom for FB shares which have been weak for months.
Oil is trading higher as tensions heat up between Israel and Hamas. Strikes are breaking out and both sides seem to be gearing up for a bigger conflict. Not good. Oil is up to $86 so far.
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The dollar is lower helping precious metals. Gold is higher to $1726, although copper is not participating.
The 10-year yield is firm at 1.60%. And the VIX is up slightly to 16.87, bouncing off its 50-day support.
Trading comment: I have not added to any trading longs recently due to the string of weak closes we have seen in the market. I am looking for a change of character in the form of a strong close. Maybe we will see it today. Who knows. But the SPX is moving further below its 200-day average, which becomes a more challenging technical setup. Big picture for our balance accounts we remain defensive and are tilting our equity allocations below average until we get past the fiscal cliff hump and see how the markets fare in early 2013.
KAM Advisors has long positions in FB