Where is the pullback?
by Peter Switzer
The S&P 500 put together a sixth straight week of gains at the start of the year, which hasn’t happened in the first six weeks of a year since 1971! The Dow missed a positive finish for the week and so it has only done five in a row, but the Nasdaq finished at a high not seen since the year 2000!
For those hoping on a pullback, note that the Dow did not get through the 14,000-level, though the S&P 500 beat the resistance point of 1515 by finishing up 8.54 points or 0.57 per cent to end at 1517.93.
Right now the Dow is up a huge 6.78 per cent for the year while the S&P 500 is up 6.43 per cent and that’s why hardheads expect a pullback.
Interestingly in 1971, the S&P index only ended up 10.71 per cent for the year despite a big jump in January. Of course, history does not repeat and I expect things to keep on improving as valuations for stocks are still pretty good and economic data keeps on improving.
Among the data
China got some great data with exports up 25 per cent in January, but their exports to ASEAN countries were up 42.9 per cent, which is a great sign not only for China but the rest of the world.
From Australia’s point of view, and material stocks, their coal imports were up 56.3 per cent and iron ore up 11 per cent.
Meanwhile the Yanks had great trade numbers with its deficit the thinnest in three years, and this could help that advanced GDP reading, which suggested the economy had contracted by 0.1 per cent annualized in the December quarter.
And while on trade good news, the German trade surplus was the second best in 60 years!
But it’s not just economic data, the company news story is also good with CNBC/ Thomson Reuters saying “almost 60 percent of S&P 500 companies have posted quarterly results, with 70 percent of firms topping earnings expectations and 66 percent exceeding revenue estimates”.
What could ruin this? Politicians!
The EU are meeting this week and the US Congress will be looking at the automatic spending cuts that start on March 1. These pow-wows could hurt markets, but I can’t see too much blood on the streets until a left-field spook event comes along.
What could that be? Well, because it comes from left-field where X-factors are made. I dunno, but I’m not too worried.
Ahead this week, there are more US earnings, as well as more economic data on manufacturing and retail sales out of the USA, while here we will have important lending news as well as key business and consumer confidence readings. These could have a big bearing on what the Reserve Banks does in March with interest rates.
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Published on: Monday, February 11, 2013
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