Sep 1, 2010

Markets rose a lot (all pretty much the same % depending on their beta) on moderate volume. Mostly within a five minute period right after the ISM report so the day was clearly news-driven. And we are now right below minor resistance.

Short-term: 3 green, 1 yellow – support here is stronger than I thought. bounce very likely
Intermediate-term: 1 green, 3 yellow – again, there is stronger support here than I thought
Stock targets: 38% swimming, 14% neutral, 48% sinking – still deteriorating but that’s not a surprise. This can lag a bit.

Watch carefully the next few days. If there is follow-thru buying, then it is possible the market has double-bounced off the July low and things could be OK. Still smells to me until next week.

ISM Report — drove the market up before it could even be read. So it was the headline that drove the market. Again that smells. Different interpretations of it
Bearish interpretation (from a bearish interpreter)
Actual report
Another interpretation
Financial mass media (WSJ) story

Overall, seems to me the economic report on the state of manufacturing was better than expected — but it says nothing about the future. Healthy markets just don’t pay that much attention to economic data because economic data is always about the past – the already known. Being surprised by the past is – well – silly. What this report does help explain is why the market has been diverging – and will likely continue. Some Main Street businesses are doing OK – and that may well continue. And those are precisely the sort of stocks that can probably be nibbled on any broader pullback here at these levels. But they ain’t gonna lift the whole boat.


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