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MV Weather Report: Market Feels Slight Breeze


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


Welcome back, I hope everyone had a great weekend. Unfortunately, the stock market decided to take a three day weekend as today's action was dull.

The S&P 500 finished the day lower by -0.34%, the index hit a low midday at 1057 before recovering to 1064. The Nasdaq was strong finishing higher by 0.24 % to 2138.

Shares of Palm (PALM), AIG (AIG), and Google (GOOG) where strong on the day while Potash (POT), Transocean (RIG) and other energy related companies lagged.

On today's Buzz and Banter, Professor Branden Rife gave his thoughts on today's sleepy action.

"I can't remember a more boring Monday heading into the end of September.

"You know its thin gruel when Dell (DELL) finally makes the acquisition they've been hinting at for months (although most thought it would be something along the lines of BMC Software (BMC) or CA Inc (CA)) and the media thinks it's a huge surprise.

"No one is really too eager to jump in and buy'em today while at the same time, those who are already have their long positions on are reticent to let anything go.

"This is typical action after having had a big multi-day (or more correctly said multi-week) run, and now everyone is waiting to see who blinks first. In fact, I can't remember having more than 2 consecutive down days since early July.

"It should come as no surprise that the tape has been (and continues to be) painfully overbought and complacency is running rampant. That being said, I have a few things on my radar as it relates to market moving catalysts this week:

  • Action in the FX markets (more specifically the US Dollar for obvious reasons)

  • Whether any hints of new quantitative easing (or forms of) come out of the Fed on Weds.

  • Action in oil (FX, economic and Iran related issues).

  • Results of the 5yr and 7yr Treasury auctions this week on Weds & Thurs respectfully.

  • Existing Home sales and Durable Goods on Thurs & Fri respectively.

  • If the Baltic Dry Index can continue to make new reaction lows.

  • If copper can hold its $2.74 range support. If not, say hello to $2.60-$2.50.

  • S&P 1035"

Rife brings up some very good points, I think most of the action this week will center on the Fed meeting which begins tomorrow and ends Wednesday. The biggest question, what is the Fed's exit plan?

Professor Fil Zucchi had a good buzz today about the upcoming meeting.

"This note from Barclay's Capital should hardly come as a shock, but I thought the wording uncommonly clear:

"FED/OPINION: "In the US, we now expect the Fed to start hiking in Sep'10 (to 1% by end-2010). Hence, over the coming months it is likely to start preparing the market for an exit strategy. This should keep market conditions volatile, and rate expectations are likely to overshoot in the process. We recommend that investors exit any longs and start trading the market from the short side."

"While of course my take is that this may well be the understatement of the decade, I will confess that the closer we get to year end - and the more the corporate credit market is back to its old ways of feeding money to companies at prices that reflect no default risk - the more I'm on my toes for the possibility of a melt-up."

I have to agree with Fil, choppy trading in earnings season followed by year-end performance anxiety.

Have a great night!

No positions in stocks mentioned.

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