Welcome to December. According to Bloomberg the S & P 500 has advanced each December for the past six years. Will 2014 make it seven?
As widely discussed the averages have staged a handsome rebound from their mid-October lows albeit this rebound was not necessarily broad based with several sectors (i.e. oil and commodities) were actually decimated.
Will yesterday’s losers be tomorrow’s winners? Most will agree the negative narrative surrounding oil, et al. is intense. I will argue if the narrative ceases, prices could rebound under the simple guise all sellers have been exhausted and the sector is so vastly oversold, any change in sentiment may have an amplified impact.
Conversely, I think the general market is overbought however markets can be overbought or oversold for a prolonged period.
I have been writing growth has generally surprised on the upside, albeit there has been some statistics that have weakened this stance. This week is a data filled week that can either validate or nullify this view. If the statistics are surprisingly strong, the monetary time table may accelerate.
Data released include the ISM, many employment reports including Friday’s inclusive BLS report, the ISM non-manufacturing index, trade balance, consumer credit, factory orders and the Federal Reserve’s Beige Book of economic statistics utilized at the upcoming FOMC meeting.
To write the incredibly obvious, this data will influence trading and monetary policy assumptions.
Last night the foreign markets were down. London was down 1.03%, Paris down 0.41% and Frankfurt down 0.35%. Japan was up 1.23% and Hang Sang down 0.07%
The Dow should open moderately lower on declining oil prices and a disappointing Chinese manufacturing data point. The 10-year is up 1/32 to yield 2.16%.