Are the markets running out of steam? My bet is that absent European drama, pullbacks will be shallow.
Markets stuck for the last week, despite the positive ISM report and no surprises in the Spanish bank report. Treasury bond exchange-traded funds continue to hold up well, no signs of a sell-off there.
Of course, we're not sure about the timing of Spain's request for aid, but obviously the big issue is global growth.
Regardless. Aside from the permabears, there are plenty eager to see a modest drop — so they can buy lower.
Remember, the finish line is in sight, and we know that many — perhaps most — hedge fund players and many mutual funds are underperforming their benchmarks for the year.
A 10 percent correction? Maybe. But much more likely is a 3 percent to 5 percent drop to roughly 1,350 to 1,400 in the S&P 500 index, right where it was in August. Then the buyers come in.
1) Initial public offerings disappoint — or maybe not. IPOs? New York Stock Exchange has them today: 1) identity theft protection firm LifeLock (trading under symbol "LOCK") priced 15.7 million shares at $9, below the price talk of $9.50 to $11.50; 2) British materials and gas cylinder maker Luxfer Holdings ("LXFR") priced 8 million American depositary shares at $10, below the price talk of $12 to $14; and 3) Javelin Mortgage Investment ("JMI"), an investor in mortgage-backed securities, priced 7.25 million shares $20, in line with expectations.
Three IPOs, and two price below the range, one at the range. Sounds disappointing, no? It used to be, but not anymore. David Menlo at IPOFinancial.com made a good point to me this morning: We are in a post-Facebook world. This is not about getting the maximum price, it's about making sure there is a respectable open and getting investors to come back. What a concept!
LifeLock CEO Todd Davis will be on “Squawk on the Street” at 11:10 a.m. ET. This is the fellow who placed his Social Security number on the side of a truck and dared people to try to steal his identity.
2) Housing strengthening? Mortgage applications surged last week as demand for refinancing jumped to the highest level in more than three years. Refinancing applications soared 19.6 percent as interest rates dropped to another record low. Loan requests for home purchases also rose, up 3.9 percent after gaining 0.7 percent in the prior week.
3) Bernstein upgrades rail. After 15 percent to 20 percent declines in the past month in Norfolk Southern and CSX, is it time to start picking at railroads? Bernstein thinks so, but cautiously.
Rails have been hit hard by the coal slowdown amid lower demand from China, and a shift to natural gas to fire power plants in the U.S. Autos are still strong, but coal had hire margins. Bernstein upgrades NSC and CSX primarily on the price drops, but it's a tepid endorsement: Analyst David Vernon expects NSC to be range bound.
—By CNBC’s Bob Pisani; Follow Him on Twitter @BobPisani
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