Stocks Surge on Hopes Of More QE
STOCK MARKET COMMENTARY:
FRIDAY, SEPTEMBER 20, 2013
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MONDAY-WEDNESDAY’S ACTION: Stocks Surge On Hopes of More QE
Stocks rallied sharply on Monday after Larry Summers dropped out of the race to replace Bernanke. The underlying notion which helped stocks rally was that Janet Yellen is now seen as the front runner and she is in favor of more QE, not less. Separately, options trading was temporarily suspended after a data glitch was reported at one of the exchanges. Shares of Apple (AAPL) were smacked after the company broke tradition and failed to report pre-order figures for their new products. Economic data was not ideal. New York State’s manufacturing index unexpectedly slowed in September. The New York Fed’s “Empire State” index fell to 6.29 from 8.24 in August, missing the 9.20 forecast. A separate report showed that industrial production matched estimates and rose 0.4% in August after being flat in July.
THURSDAY & FRIDAY’S ACTION: STOCKS DIGEST THE RECENT MOVE
Stocks were quiet on Thursday as investors digested Wednesday’s strong rally. Economic data was mostly positive. The Philly Fed index jumped to 22.3 which was the highest level in over two years and easily beat expectations for a reading of 10. The National Association of Realtors said existing home sales surged 1.7% to a 6.5 year high of 5.48M units, easily beating estimates for 5.25M. Weekly jobless claims rose by 15k to 309k but the reading was distorted as two states were still working through a backlog of unprocessed claims from last week. Finally, leading economic indicators topped estimates and rose nicely in August. Stocks fell on Friday as the enthusiasm waned regarding valuations and future QE.
MARKET OUTLOOK: Bulls Are In Control
The market looks very strong as this bull market is alive and well. The latest pullback was short in both size and scope which bodes well for this market. Please note that our goal is to remain in sync with the broader trend of the market (up or down) and not get caught up with the minutiae of changing labels on the market status very often. As always, keep your losses small and never argue with the tape.