Stocks gapped up to start the session as news that Spain is working on a set of economic reforms to present next week, as a next step towards a formal request for assistance from the European Central Bank helped spirits. However, as the day continued stocks slowly sold off in a very quiet fashion and by the end of the day indexes were mixed and near the flat line. The S&P 500 fell 0.01% while the NASDAQ gained 0.13%. BespokeInvest notes it has been nearly three months (Jun 25th) since the DJIA had its last 1%+ decline; the longest such streak since 2006. While specific sectors have been hammered on some of these days, money has continued to rotate into others, keeping the major indexes from spilling deeply into the red.
To that end as money came out of some of the hot sectors of last week, it was a very strong week for healthcare and consumer staples - two defensive areas of the market. While bulls do not want to see these areas lead over the intermediate term, this sort of rotation is ok in the near term as markets digested the QE3 hoopla.
As we can see below the overbought condition seen last Friday has been stymied as the McClellan Oscillator is back to nearly zero.
As for the major indexes not much change from the previous few days as they ended up nearly where they closed Thursday.
So all in all a "no harm no foul" week for the markets, despite a continued litany of not so good economic news globally and some more warnings from key corporations. How much longer this "see no evil, hear no evil" situation can continue is the question, as market participants continue to keep their faith with the global central banker put. As for the real data - housing in the U.S. continues to show decent numbers, weekly jobless claims continue at levels that indicate very modest monthly job growth, and purchasing managers indexes worldwide continue to show either slowing growth (China) or contraction (Europe). And of course we had an additional QE action by the Bank of Japan.
Have a good weekend, and we'll see you back here Monday.