May Is Lovely, Starting As A Market Bargain Hunter

So was the Thursday selloff just a flash in the pan? Was it another short-term bottom? Traders seem to think so; they went bargain hunting to start the month of May on a high note as they took the Dow back up 183 pts … But were there any real bargains? Not so much, just slightly reduced prices, but enough to cause the trader types to jump back in.

Despite Friday’s strength, the major averages all ended lower for the week. Nasdaq tumbling by 1.7%, while the Dow and the S&P 500 fell by 0.3% and 0.4% respectively. The macro data last week continued to confirm confusion … The ISM reported that manufacturing activity continues to hold steady … as they reported a read of 51.5 — unchanged from March — but a bit below what analysts had expected. Remember, anything above 50 is a sign of expansion; so if you believe the numbeR, then we are seeing continued growth in the manufacturing sector. The confusion comes from the fact that the committee noted that 15 of the 18 maufacturing industries reported growth in April vs. the 10 in March, so supposedly a broader distribution, yet the overall number was unchanged … someone is not being completely honest here … Math is a funny thing; you can manipulate the numbers anyway you want .. .

In a separate report the Commerce Dept. showed an unexpected drop in construction spending in March. The report said construction spending fell by 0.6% vs. the expected rise of 0.5%. And the Univ of Mich said what? Sentiment remains robust at 95.9 — and so the mkt, with all the conflicting data — continues to trade near record highs.

Earnings this quarter disappointed almost on a daily basis — but investors did not seem to care. Earnings are history — it’s over — it is the forward guidance that is important. European macro data also did not set any records — yet those markets are teasing with multiyear highs as well. Asia’s macro data are mixed and those market are all trading up … so what is the common theme? Come on, you know the answer … The central banks. And so as long as the central banks are playing such a key role, the markets will never really trade on their own which is why global mkts are teasing with new or all time highs …

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