China reported last night that its PMI mfg index rose to a five-month high at 49.7 in May. It stock market didn’t care. It closed down 0.2% last night.
While the overall Eurozone saw its PMI output Index slip to 53.9 in May but remain above the 50 recessionary boundary, France saw its economic stumble continue in May, its PMI falling to a three-month low at 49.3, beneath the 50 recessionary mark. But it’s stock market doesn’t seem to care that its economy continued to stumble in May.
In the U.S., the market has been in a sideways trading band since February, unable to get traction in either direction.
Year to date: Dow: – 0.3% S&P 500: + 2.6% Nasdaq: – 1.1% Russell 2000: – 5.2%
We’ve been saying over the last week that the market is probably waiting for today’s report on existing home sales in April, and tomorrow’s report on new home sales, as evidence of whether the economy is bouncing back from the winter slowdown.
But then, we thought in previous weeks that the catalyst that might get the market out of this going nowhere stagnation might be the monthly jobs numbers for April, or retail sales for April, or the revision of 1st quarter GDP. But, even though they each came in with big surprises in one direction or the other, and as important as they seemed to be, they each created only brief kneejerk reactions that quickly reversed. The market didn’t care.
But still, maybe the home sales for April will do the job. There couldn’t be more important evidence of whether the economy is recovering from the winter slowdown, could there?
Why has financial reporting become so dramatic in recent years?
Am I the only one annoyed by headlines, like these of the last few days, that seem to promise important information, only to find on clicking on the link that the the story is mush, nothing like what the headline implies.
“Microsoft and Apple COMPLETELY Disagree About the Future of Computing”. [Completely was capitalized in the headline].
The story: Not about the future of computing, not even computing overall, nor even of a serious disagreement over anything major. Only about their different approaches to how many features should be designed into their ‘tablets’. Should they only be for simple Internet browsing and gaming, or should they have a keyboard and more serious computing power.
“An Incredible Explanation For the Relentless Stock Rally”.
Wow. Click on it quick. We’ve seen hundreds of explanations for the resilience of the rally. No thousands. But an “incredible” explanation?
Dang! Not an explanation at all. Just an expression of wonder at it all, that the S&P has gone 468 days since experiencing a correction of 10% or more. And then a list of three opposing opinions, that Rich Ross of Auerbach Grayson says the stage is set for a 10%, maybe 20% correction; Gina Sanchez of Chantico Global “doesn’t know what the straw will be that breaks the camel’s back, but defensive stocks continue to be better bets.”; and Josh Brown of Ritholtz Wealth Management who says the bias is toward buying equities every day and almost never selling. It means adding to stocks sheepishly on up days and voraciously on the (rarely occurring) down days.”
Then there are the stories that actually do carry on the theme of its headline. Like:
“Don’t Hit The Panic Button on your Portfolio”. The advice: Don’t sell anything whether the market is going up, sideways, or in a serious bear market because that’s how the majority of investors wind up losing money over the long-term.
No it isn’t. A hundred years of data shows the majority of investors lose money over the long-term because they don’t sell to take profits. They buy high by coming into bull markets late, and then caught up in such “don’t panic and sell” advice at tops, wind up selling low, after the bear market has decimated their portfolios and they can’t stand the pain anymore, only to repeat the process in the next bull market.
To read my weekend newspaper column click here: Wall Street Says It’s Different This Time
Sy Harding publishes the financial website Street Smart Report Online and a free daily Internet blog at Sy’s Free Blog. In 1999 he authored Riding The Bear – How To Prosper In the Coming Bear Market. His latest book is Beat the Market the Easy Way! – Proven Seasonal Strategies Double Market’s Performance!
It includes our research and analysis on the economy and markets, and provides charts and buy and sell signals on the major market indexes, sectors, bonds, gold, individual stocks and etf’s, including short-sales and ‘inverse’ etf’s.
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