The trading pattern remains the same: the market does not move up unless there is some outside piece of news. Today, it is the better than expected CPI. Yesterday it was comments from Standard and Poor'sand hopes for a government rescue of the mortgage market.
Absence some piece of news, the overwhelming trend is to sell into any rally. The lesson to traders is pretty clear: the market will have a hard time rallying consistently until there is a belief that the mortgage crises is being resolved.
The most important factor short term may be the calendar. We are coming up on the end of the quarter and very few people are long the market. The bearishness, the ratio of shorts to longs, all are at very high levels.
Another point about the calendar: remember next week Goldman , Lehman , and Bear report. Opinions are all over the map: some think the writeoffs next week are huge, many are thinking that’s going to be the end of the writeoffs. Other think they will do better than expected.
There's also a very clear pattern developing with retailers: in general, they are coming in at or very close to expectations for the quarter just ending, but they are guiding below expectations for the current quarter and, in many cases, below guidance for the year. Three examples today:
1) Ann Taylorcame in at $0.19, a penny short of expectations, but guidance for the current quarter is below expectations;
2) Aeropostalebeat expectations but guidance for the current quarter is below expectations;
3) Pacific Sunware also reported decent earnings, but current quarter and full year guidance is below expectations
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