Thursday, December 01, 2011

Another consolidation day for the stock market

Today will likely be another consolidation day for the market after the big gain yesterday. The two likely scenarios are either a weak open followed by a modest to moderate decline through the day or a weak open with some initial decline but with recovery and modest strength later in the day. After the big gain yesterday it would not be surprising to see some significant profit-taking, but we could just as well see further gains on a more moderate scale.
 
The unemployment insurance initial claims report was a modest disappointment, but was actually quite decent with only a modest rise within the range of volatility for this data series while the 4-week moving average remains under the 400K recession threshold. That is good economic news. Traders may treat the report as negative as an excuse to try to fabricate a "risk off" bias in the market, and may be successful, for a little while, but ultimately this was not a truly "bad" report or an indicator of bad-ness to come.
 
Europe is roughly as it has been, an ongoing saga, but it is worth nothing that demand for an auction of 5-year notes of Spain was double the amount offered, which is actually quite good news.

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