The markets remain in a state of uncertainty from my view. The bounce or positive effect of Greece cutting a deal lasted for all of three, maybe four days. As I have discussed many times over the issues facing the market are more than Greece, more than the issues facing the EU, China or the emerging markets. The reality is that the US markets are not growing they are limping along at 2% GDP if we are lucky, and every one seems to believe it will get better in time. Being around the markets as long as I have… time is not one thing that works for markets with short term views. As Ms. Yellen stated many time in her remark before Congress, growth is materializing… When? That would be the optimal question. The markets as a result remain in the trading range of speculation and the news from the beige book and economist support the outlook for lower growth. At some point the markets will reconcile the indifference. That is why I continue to state… take what the market gives, but you must manage your downside risk.
Taking a quick look at the sectors today… financials were the leader on the upside as earnings have helped the near term boost for stocks. This remains a sector to like based on the current assumptions that the Fed will hike rates going forward and their belief that growth will pick up to compensate for the shift in rates. It will have volatility, but as you can see in the chart of XLF the upside has resumed for the sector. Utilities made a solid move as well on the day and continues to sport a wedge after attempting to break higher. Looking for the upside confirmation short term. Healthcare and technology were the other positive sectors on the day… barely, to complete the positive moves. Energy, telecom and basic materials rounded out the bottom or moves lower. The move lower of 1.7% in the energy sector dismisses, at least for now, the view from analyst that the bottom has been put in for the sector. I continue to watch how energy unfolds, but not overly optimistic. Thus, scan and trade within the leaders that have sustainable moves in motion like healthcare and biotech.
Not much changed on the charts today, but we have to watch and see how this unfolds looking at tomorrow and forward. The upside bounce was positive on the Greece news… but, now come the challenge of seeing the data shift along with momentum back to a focus on growth in the US markets. Remain patient and let this unfold one day at a time.