Saksamaa DAX -0,12% Pantsusmaa CAC 40 -0,63% Suurbritannia FTSE100 -0,27% Hispaania IBEX 35 +0,03% Rootsi OMX 30 +0,32% Venemaa MICEX -1,28% Poola WIG -0,53%
Aasia turud: Jaapani Nikkei 225 -1,96% Hong Kongi Hang Seng-0,59% Hiina Shanghai A (kodumaine) -1,19% Hiina Shanghai B (välismaine) -0,19% Lõuna-Korea Kosdaq +0,50% Tai Set 50 -0,46% India Sensex 30 +0,95%
A Broken Market By Rev Shark RealMoney.com Contributor 6/30/2010 8:28 AM EDT
Not being able to govern events, I govern myself. -- Michel de Montaigne
It is the last day of the second quarter of 2010, and it has not been a good one. We started off well, as the amazing light-volume levitation off the February low continued into April, but at the end of the month the market underwent its first real change in character since the bottom in March 2009.
The most notable characteristic of this market as it rallied for over a year was the light volume and the propensity for "V"-shaped bounces. Numerous times it looked like the indices were going to break down, but just as we started to crack we would reverse and go straight back up on declining volume. The rally this past March was a particularly good example.
Computerized trading has received much of the blame for this rather peculiar technical action, but the flood of liquidity caused by bailouts and stimulus plans also was a driving force. With interest rates near zero, there was just too much cash looking for a place to go, and much of it was parked in the stock market.
At the end of April, things changed. There has been a major political shift as the economy continues to struggle despite massive spending and worry grows over the huge budget deficit. The flood of liquidity has dried up and the dip-buyers who pounced on every little pullback no longer have the ability to run the market straight back up after every slight pause.
Since the end of April, the market has suffered three failed bounce attempts and has been turned back almost exactly at key resistance points a number of times. Suddenly the overhead resistance that was completely irrelevant during the market rally is having a significant impact, and market players are again intently focused on key support and resistance points.
Yesterday we breached another important support level. This was the low of the year for the S&P 500 at 1040. We did manage to bounce enough in the final minutes of trading to close above that level, but it was a technical victory for the bears.
At this point there is no question that we are caught in the grips of a nasty downtrend. The S&P 500 is down close to 15% from its highs; the big question is whether we are falling into another bear market or whether this just an ugly correction that will overcome in the near term.
The bearish perspective is a compendium of recent headlines. The news flow has been terrible -- economic stats weak, Europe a shambles, China struggle, oil leaking in the Gulf, and so on. During our yearlong rally, we blithely shrugged off all the worries and concerns about the slow economic recovery. The high unemployment rate was a nagging problem, but the market was capable of ignoring it for a long time. The mood has shifted now and we no longer are capable of ignoring bad news so easily because we no longer seem to have this endless flow of capital to push us.
The bullish case here is that although we are going through a rough patch, things have improved. Maybe the market was a bit ahead of itself, but there is slow but steady improvement, and the problems in Europe and China won't kill the recovery here. The bulls are particularly optimistic about upcoming earnings reports and believe that once we see some solid numbers and good guidance, we will find our footing and turn back up.
For now the bears have the benefit of the doubt. We are overdue for some sort of oversold bounce, but make no mistake about it -- this is a broken market in a downtrend. We need to respect that beyond all else. The biggest danger in a downtrend comes when you keep trying to anticipate a bottom that doesn't come. There is nothing wrong with looking for bounces and countertrend plays, but nothing can cause more damage than constantly trying to call the exact bottom.
We have a little bounce shaping up this morning. Asian was weak again overnight, particularly Japan, but Europe bounced a bit as the ECB funding operation eased fears of debt crisis.
Hopefully we'll have some upside trading opportunities as an oversold bounce develops, but be careful out there and make sure you keep a tight watch on positions. This is a market that has some major problems. ----------------------------------- Briefing.com vahendusel: Ülespoole avanevad:
M&A news: STST +40.0% (Boeing to acquire Argon ST for $34.50/share in cash), ABII +21.1% (Celgene to acquire Abraxis BioScience for ~$71.93 in cash and stock), .
Select financial related names showing strength: BCS +4.8%, LYG +3.7%, STD +3.0%, COF +2.4%, C +2.4% (Cramer makes positive comments on MadMoney), DB +2.2%, UBS +2.0%, CS +1.9%, BAC +1.5%, HBC +1.3%, RF +1.0%, HIG +1.0%.
Select oil/gas related names showing strength: BP +4.8% (traded higher overseas), STO +1.5%, RIG +1.3%, E +1.3%, TOT +0.8%.
Select European drug names trading higher: GSK +1.4%, SNY +1.1%, NVS +0.8%.
Other news: ANX +14.9% (light volume; announces 9-month stability data results for ANX-530), TSLA +6.7% (new IPO seeing continued strength), PT +6.4% (TEF discloses it increased offer for stake of of BRASILCEL, N.V. from the company), ADES +5.8% (Arch Coal licenses ADA-ES Coal Enhancement Technology), ALV +4.4% (still checking for anything specific), ACN +0.9% (Cramer makes positive comments on MadMoney), .
Analyst comments: LPX +3.9% (upgraded to Outperform from Underperform at Scotia Capital), BTU +2.0% (upgraded to Buy from Hold at Deutsche Bank), F +1.2% (Hearing upgraded to Hold from Sell at Citigroup).
Allapoole avanevad:
In reaction to disappointing earnings/guidance: AM -5.2%, GIS -4.2%, MON -1.6%.
M&A news: CELG -5.2% (Celgene to acquire Abraxis BioScience for ~$71.93 in cash and stock).
Other news: TIBB -42.0% (North American Financial Holdings to invest $175 million in TIB Financial), ETRM -22.9% (approved a 1-for-6 reverse split of its common stock effective upon close of July 9), STEM -8.1% (announces $6 million equity financing), MELA -3.6% (announces proposed public offering of common stock), GHDX -2.1% (light volume; files to sell 10 mln shares of common stock).
Analyst comments: FTE -1.5% (light volume; downgraded to Neutral from Buy at Goldman).
2 kvartali kokkuvõte: Reviewing the performance of global equities during the second quarter, the U.S. markets registered losses between 9.4% and 11.3%, outperforming Shanghai which suffered a 22.9% plunge. Volatility as measured by the VIX soared 93.8% for the quarter as fear crept back into the market, and the cost of protection almost doubled.. It should be noted that South Korea's Kospi was the only major market to close in positive territory (+0.3%). Looking at Europe, France's CAC and Britain's FTSE dropped 13.4%, while Germany's DAX outperformed with only a 3.1% decline. Reviewing the currencies, the safe haven plays of the dollar (+6.1%) and yen (+5.4%) were winners, while the euro (-9.4%) suffered the heaviest losses.