Setting Up to Be Interesting Week Its safe to assume that stock market followers know last week didnt end on a very good note and that last week in its entirety wasnt a good week for the stock market. Things are looking a bit better this morning, however, as the S&P futures are trading 0.3% above fair value. The positive bias can be attributed in large part to an expectation that there will be some buy-the-dip action at the open as participants accept the explanation that Fridays weak finish was owed in part to tax-loss selling efforts. In other words, it was the type of stepped-up selling interest that had a strategic aspect to it, suggesting it could very well be short-term in duration. The conditional tense is important of course because the market had not been acting well leading up to Friday. Crashing oil prices and residual concerns about exposure to that crash have left many account managers in capital preservation mode with year-end approaching. The latter disposition was captured in the CBOE Volatility Index, which soared 78% last week. It should certainly be an interesting week this week. The FOMC meeting, which will culminate with a new directive and press conference by Fed Chair Yellen on Wednesday, is certain to be a focal point. The direction of oil prices -- and the markets reaction to the direction oil prices go -- will also be watched carefully as market participants are looking for some bottoming clues. At the moment, WTI crude futures are up 0.3% at $57.97/bbl. Over the weekend, Japans parliamentary election went as expected. Prime Minister Abes LDP party won big, taking 325 seats on what was reported to be the lowest voter turnout since World War II. Despite the mandate to follow through with Abenomics, Japans Nikkei declined 1.6% on Monday. On a related note, a business sentiment survey for Japans large manufacturers dipped to 12 from 13, which was interesting given the yens weakness. In other developments, Chinas Shanghai Composite jumped 0.5% amid reports the Peoples Bank of China researchers see 2015 GDP growth slowing to about 7.1% in 2015 from around 7.5% this year. The translation for many market participants there is that more policy stimulus should be forthcoming. Per usual, time will tell. The corporate news here is limited, although it is certainly worth noting that pet supplies and services retailer PetSmart (PETM) is being acquired in an $8.7 billion leveraged buyout deal by a consortium led by BC Partners. On the economic front, the Empire Manufacturing survey for December pointed to a contraction in manufacturing activity in the region with a reading of -3.6 versus 10.2 in November. The Industrial production report for November (Briefing consensus +0.7%) will follow at 9:15 a.m. ET.
Posted on: Mon, 15 Dec 2014 14:08:34 +0000
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