Fun day for the markets to end the week. The chart below is the 5 minute chart for the NASDAQ 100 index and you can see the sell off during lunch that bottomed around 2 pm and rallied to close positive on the day. For me that explains the week and month of May. Directionless relative to the reality of the fundamentals and the technicals. As we now the technical or trend wins short term and longer term fundamentals win. For now we take what the market gives and digest that first quarter minus one percent growth and hope things improve. The economic data released on Friday was mixed… again. Consumer sentiment fell to 81.9 versus the 82.5 expected and well off the 84.1 for April. Disappointing would be an understatement from my perspective. Personal spending dropped again as personal income was flat. The impact to the consumer, in terms of the outlook for the economy, are showing a lack of faith overall.
As the month of May comes to a conclusion the upside won. As for the outlook going forward, caution remains the buzzword and the guideline. I know what the analyst are saying on both sides of the battle… the buyers believe the upside is just getting started for the next leg higher, and the sellers are quoting the growth of the economy and earnings as a concern and we are heading lower. It all sounds good, but whoever is willing to take the biggest stance wins. That will take time and we will go with the trend and ignore the noise.
The updates will be posted as usual over the weekend, and we will update the models as well as the current positions. Relax and get plenty of rest… something tells me you will need it.
Have a good weekend.