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MARKET WRAP UP 11/10/10
After the rich meal and flowing wine enjoyed by the bulls last week, there were two main scenarios that I thought would play out coming into this week. The first scenario was a situation where Mr. Market’s digestive system rejected the food, causing him to suffer from nausea and become ill (a violent reversal, negating all of last week’s rally). The other possibility was that Mr. Market would have a glass or two of a fine digestif, such as sambuca, and then take a stroll for a while before coming back to the table to eat more. Based on the price action that we have seen since Friday, the latter scenario appears to be taking hold.
That is, we have now seen several days of benign consolidation by the broad market, albeit with some bouts of sharp profit-taking here and there. Nonetheless, the high momentum market leading names are sitting with uptrends firmly intact, with bears unable to use their claws to make much of a puncture wound. With the S&P 500 closing up 0.44% to 1218, stocks bounced impressively off of an intraday low of 1204. The fact that the S&P closed on the highs has got to give a good boost of confidence to bulls who had stepped in to buy the dip. In fact, one of the hallmarks of a sustained uptrend is the high level of confidence that the dip-buyers have. Of course, dip-buying will eventually fail, but trends also continue much longer than most market players deem possible.
In the after-hours trading, I see that CSCO is taking a beating on the back of lowering their guidance. Whether or not this serves as a catalyst/excuse for more selling in the broad market remains to be seen. For the past several years, I have viewed CSCO as a stodgy, old tech firm that was never a market leader in terms of price action, although many macroeconomic investors key off of them. We also have the Veteran’s Day holiday tomorrow, so I would expect trading to be a bit slow. However, that would fit neatly into the theme of this week, which is basically a healthy digestion of last week’s breakout to 52 week highs.
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I see futures down largely , wouldn’t be surprised they use cisco’s earnings to catalyst futures->market down to load up lil bit more
today action was all-bullishness.
Chess has employed cunning strategies in this market over the past several weeks. The like has never been seen since Al Swearengen dealt with those loopy cunts from Yankton. Keep up the great work, love stopping by and reading the blog.
Thank you Brother!