We need more great news
by Peter Switzer
Newspapers and other media outlets will tell you that Wall Street was down on eurozone fears and crap like that. That’s because the writers don’t really have much to say to explain why Wall Street was down overnight.
For the record, the Dow was down 6.74 points, that is nothing, to 12,653.72, while the S&P 500 index was down 3.32 points to 1313.01.
This was a nothing day because, simply, nothing is doing, apart from something out of Italy. Of course things are brewing such as the outcome of the EU meeting in Brussels today and we should see some permanent rescue fund agreed to out of this meeting.
Meanwhile there were reports that the Germans want a budget inspector watching Greece but the Greeks have apparently rejected the idea. I reckon it’s a sound idea and it shouldn’t be a deal breaker.
Against this, the Italians got a bond auction away at much lower yields and this is a big story compared to the others that might have moved markets.
Right now stocks have stalled at these levels because Europe and its problems are in a better position than they were in August last year. But now we need to see some more positive news to push markets up to a new level.
At the same time because of the nice rise in stocks since October, there’s a desire to sell off by some professionals to pocket profit before buying back in again at lower levels.
One small concern was a weakish consumer spending number as US saving increased. This will have to be watched but there are a lot of other economic numbers that say the US economy is growing nicely without shooting the lights out.
What happens in Europe and how the US job numbers do along with the ISM survey for manufacturing as well as services will have a big impact on how stocks perform this week.
By the way, the VIX of fear index did go to 20 overnight and that reflects a bit of fear creeping back into stocks and this needs to be offset by better news out of Europe.
Finally, since 1950, every time the S&P 500 index has put on four per cent or more in January, the index has ended the year with a double-digit percentage.
In the absence of any really good news out today, try this. At the moment, the index is up 4.4 per cent for January and there’s only one day to go!
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Published on: Tuesday, January 31, 2012
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