Is this the beginning of a significant pullback or just a small retracement for the next move up? There seem to be a lot of mixed signals in the market right now. But putting technicals aside, one thing I've noticed in the past week or so is that the market is no longer ignoring bad news. Aside from a few big down days, the market has continued to march forward from it's July low, stair stepping it's way to new highs along the way. And there has been good news and bad news during that time, but it chose to ignore the bad and really embrace the good. Maybe it's that no one is sure what exactly is good news/bad news now. Do we want a strong economy... I would think so, but then interest rates may go higher. Or do we prefer a weak economy so that the fed may start to consider cutting rates. There is even a hint of selling into good news...as some of the earnings this week have been pretty decent, stocks took off after hours and pre-market, only to have the market sell off during the day. To me it looks like a negative divergence. With a significant amount of news (economic and earnings) on the horizon for next week, I am betting on the downside.
Some of the earnings of note for next week are Google, 3M, Merck, Altria, and Eli Lily. And among some of the energy stocks announcing are Exxon and Valero Energy. The economic calendar is heavy next week with the most important probably being the 2 day fed meeting. They will announce their decision on rates on Wednesday and as usual it's not the rate decision (most are guessing they will stand pat for now) but the "language in the statement" ( Can't you just feel the drama). All eyes will also surely be on the Jobs Data that comes out on Friday. Among other reports of note are Consumer Confidence (Tues.), GDP and Chicago PMI (Wed.), Personal Income/Spending and Initial Claims(Thurs.) and Factory Orders (Friday).
Being in the middle of earnings season and with all this economic news out next week, I would have to say I am "cautiously pessimistic".
Happy Trading!
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