Stocks came out of the gate strong as the indexes were in an oversold condition to begin the day but sold off relatively quickly in the first hour, and then sort of were rangebound the rest of the day. Considering how oversold we were on some secondary measures this was not much of a bounce. The S&P 500 actually ended down for the day by 0.01% while the NASDAQ tacked on 0.06%. For the week the S&P 500 fell 1.7% and the NASDAQ 1.5%; keep in mind we are coming off a recent 8 week winning streak. Next week we have the last Federal Reserve meeting of the year and some are speculating there will be a reduction in quantitative easing, but really there seems to be no reason to believe that with Ben Bernanke about to retire.
The indexes took some hits this week, but the rally has been long in the tooth in terms of not having any blood. Some pullback is needed to cleanse, and clear out some complacency.
It is worth pointing out copper, which has struggled for much of the year. Generally you want to see copper, like oil, rally with equities to confirm that a rally is based on economic improvement. But both commodities have been dead in the water in 2012. That said, we are seeing signs of life in copper this week; it would be nice to see it rally to show that equities are rallying on something other than money printing.
Retail stocks had a quite rough week but the ETF for the sector is now down to its 50 day moving average - it will be interesting to see if it bounces soon.
Visa (V) held in quite well this week - it probably was granted some halo effect from the split announcement from Mastercard.
After correcting for 6 weeks, Facebook (FB) has shown nice relative strength after breaking out above its downtrend line.
Again next week we have the Fed announcement on Wednesday but we can expect volume to dry up after that as many close out their books early on what has been a spectacular 2013.
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