Marketview: Out of the Loop

• Posted by DynamicHedge
• on April 28th, 2012

Greetings from the beautiful island nation of New Zealand.  I’ve been away from my desk for the last trading week but still managing to keep one eye on the markets.  The big news is that Spain was downgraded again and reported some big unemployment numbers and still managed to have a decent auction.  Equity markets seem to have shrugged off any residual bad feelings toward the Spanish people for the time being.  Overall, this has to be seen as a pretty big positive for the market and probably means that the bulls will feel bold enough to aim for some new highs.  If so, I expect this high to be a bull trap of sorts.

Question is, does the fact that the Governing Council of the ECB is meeting in Spain this week rather than in Germany mean anything important?  Market participants may just be too crisis-fatigued to notice that the ECB may be signaling something important with the location change and how it applies to the potential Spanish crisis playbook.

Big focus next week will be on Friday’s jobs number.  Many nonfarm payroll weeks have strong trends into the report.  Couple that with the ECB meeting and I would not be at all surprised by a very directional week up or down.  A week full of economic reports means that strength or weakness on Monday and Tuesday could have good directional follow thru into Friday unless there is a huge surprise announcement.

Sector strength and weakness was a cloudy picture last week due to earnings and other factors.  The bull case is still pegged to the overall continued strength and leadership of the technology sector and this story is still playing out.  Still, my position remain the same.  Long caution, short precision.  I’m still very bullish in the long-term but the market is due for a correction before charging higher.

Winners: $AMZN, $AAPL, $UNP, $NSC, $DVN, $BHI, $EMR, $WMB

Losers: $PG, $WMT, $WAG, $MS, $BAC, $FDX, $CAT, $DOW

Interesting seeing how important China is to both the Australian and New Zealand economies.  I’m back at the desk Wednesday and will be posting some thoughts on some observations from my travels.

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