Marketview: Go Play Outside


An abbreviated holiday week with thin markets trading some very large ranges. Both the Bank of England and ECB held rates unchanged and issued statements pledging continued low rates — no taper-talk. NFP beat expectations and was upwardly revised. The Euro-crisis embers had a brief glow with Portugese bond yields rising over 100 basis points, luckily the market doesn’t care about Portugal anymore.

The trend appears to be intact and the S&P’s path of least resistance is to at least test the previous highs. The USD/JPY is above 100 and the trend also looks is intact. Despite some generous volatility in the tape, the winning trade continues to be on the side of central banks.

Consumer discretionary, energy, technology, and financials were strong this week. Utilities, staples, and basic materials lagged. Technology should see some follow thru strength off relatively oversold conditions. Financials and consumer discretionary are the leading sectors of this rally and you should be following them closely for any for early warning signs.

Our indicators continue to skew to the long side. Try not to over think this market: biased to higher prices and intermittent violence.

Winners: $AAPL, $NOV, $BHI, $HAL, $TWX, $CMCSA, $MA, $V

Losers: $EXC, $SO, $SPG, $PFE, $BMY, $AMGN, $DD, $CAT


Side note: Watch out for breadth. If this starts to diverge significantly with higher prices, we’ve got a big problem.


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