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MV Weather Report: Market Still Stubbornly Ignoring Headwinds


Rain or shine, we review the day's biggest stock stories.

Today's trading day was a mirror image of yesterday's; the only exception is that the market didn't go up 3%. The news flow was the same: First, we got better-than-expected ISM numbers; then, the Wall Street Journal reported that 10 of 19 banks would need more capital. Is this not bad news?

Either way, it doesn't seem to matter to the market: It never really reacted. The S&P 500 closed at 903, down 3.44.

There were 2 big individual earnings winners on the day: Intercontinental Exchange (ICE) and Wynn Resorts (WYNN) both made large moves after reporting better-than-expected numbers. Amazon (AMZN) also had a nice up day on news that the company is releasing a new Kindle aimed at college students (the textbook market).

Here's a Buzz & Banter post by Professor Smita Sadana.

"One of the hallmarks of strength is how the market shrugs all bad news and continues to plow higher. Yesterday, the band seemed to be stretched to the limit as evident by the SP-500 trading 3 standard deviations above the 20-day moving average, which is a rare occurrence.

"The last time this happened was in January, 2009.

"The important thing is that such strength needs to be respected in the short term, while expecting (and welcoming) pullbacks.

"In the chart, notice how the price has been consistently trading in the top half of the Bollinger Bands. That signifies that the mid-Bollinger Band (20-day moving average) should provide strong defense, (first time around) during a pullback.

"And such stretched charts are also visible in several other indexes, more noticeably Dow Transports."

Many traders are starting to get frustrated waiting for this pullback. Could it be that the perfect setup will be when the stress-test results are finally released? That happens the same day we get the jobs number.

Tomorrow, we'll get earnings from Devon (DVN), Transocean (RIG), XTO Energy (XTO), Foster Wheeler (FWLT) and Agrium (AGU). Also, heads up on the ADP Employment Change.

All right, Minyans - Happy Cinco De Mayo. Have a great one!
No positions in stocks mentioned.

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