Please hold on to the break above 1850… If you can imagine someone begging as they say that phrase, you would have an image of the trading day for Thursday. It was a modest day on the upside following a negative open for stocks. The continued tug-o-war between the buyers and the sellers is still being played out this week. Tomorrow ends the month of February and the data today shows the importance this months numbers will play in the psyche of the market short term. We have to be patient and let it all play out, but the reality of the current data will be a key influence going forward.
The focus on 1850 is getting to be too much for me at this point and it is taking away the technical validity of any move going forward. The simple of it for now is the market is facing resistance at this level and until the catalyst shows up this may continue. Economic data may be the ticket next week as we get the first look at the results for February.
Durable goods fell 1% in January, but the estimates were for a decline of 2%, thus the bad news was good news as it wasn’t as bad as expected. That said, the durable goods have been lower three of the last four months. That reflects the current trend of the data overall. Even Fed Chair Yellen eluded to the concern by the Federal Reserve as they have been monitoring the recent trend lower in the economy. On a side note relative to Yellen’s testimony to the Senate Banking Committee… Please, Please, Please bring back Bernanke! I thought the 70 year old version of Pee Wee Herman was talking. Sorry, just saying. And, last but not least, the blame it on the weather comments were awful!
The jobless claims jumped to 348,000 versus the 334,000 last week. Tomorrow is the GDP revision for Q4, Chicago PMI, University of Michigan Consumer Sentiment, and Pending Home Sales. Plenty more to chew on heading into the weekend. The good news is, if the numbers don’t add up to a positive outlook, it will be written off to the weather and Ms. Yellen made sure that would have validity with investors during her testimony today.
The pending storm is circling around three primary concerns, first, the outlook for growth in the US. Not just the economy, but earnings and revenue growth as it relates to stocks. With March, we will again conclude another quarter and it will be earnings season again. Where will the growth come from? This is what we have discussed many time and the challenge remains. As I have stated before… fundamentals matter, when they matter.
Second, China is a pain in the emerging market and global outlook side. Do they really have a credit problem? What about bank liquidity? Will growth return to the country anytime soon? The market both in the US and globally wants some clarity on the issues facing China.
Third, emerging market headache needs more than Tylenol! There is no one front that is the exclusive concern. It is Brazil, China and the Ukraine of late. Throw in Argentina, Venezuela and Turkey and the hits just keep coming. Some resolution, or at the least clarity, is needed relative to these countries and others going forward.
Plenty to consider as we end the month and look to the future. After all the S&P 500 index closed at 1854 today and that surely means higher levels for the US markets… right? Time will tell, watch and see how this plays out tomorrow.