Marketview: Financials Continue Drag, Safety Trade Back On

The volatility is staggering — macro cross currents are mind numbing.  The stock market just isn’t that fun to write about right now, mostly because I hate being so bearish.  Look at all the charts you want, just know the fate of the market is being decided by the German and French elite behind closed doors.  Not exactly a good feeling.  The market is hungry salvation but participants continue to buoy equities in anticipation of continued moral hazard.  The world is a bit random and and the universe indifferent but people do move in cycles.  The current cycle seems to be to trade lower in spite of what stimulus materializes from government.

Have you ever met a person who claimed they followed a herd?  With every person writing about the stock market claiming to be a contrarian how can you find a crowd to differ from?  In the high speed information world it’s often easier to find answers in the meta rather than finding meaning in actual events or real data.  Everyone is a contrarian looking for the new, new, new normal.  Maybe it’s time to stop over thinking things so much.  The trend was higher and now it is lower.  Maybe, in a world filled with noise, being a sheep is the new contrarian?

For this week we saw continued weakness in financials, energy, and basic materials.  Strength came from defensive sectors like consumer staples and those who sell them.  Interesting pocket of strength in financials was $V and $MA.  Early in the week we saw the value crowd throw some money into the market providing a temporary boost to the broad indexes.  It looked like the safety trade was coming off but soon after week defensive names in the $OEX had made a new high 52-week high.  Premium on safe liquid assets still exists across equities and credit markets.

Winners: $WAG, $CVS, $KFT, $TGT, $CL, $V, $MA

Losers: $JPM, $C, $MS, $GS, $FCX, $HAL, $HPQ



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