Monday recap: Stocks rallied nearly from bell to bell on Monday as investors looked past dismal retail earnings, last week’s steady parade of selling, and of course the terrorist attacks in Paris on Friday evening.
An early rebound in the price of oil helped get the rally started and although the move higher in oil faded by mid day stocks not only held their early gains but found another gear higher just before 12:00 Noon. While we saw no headline catalyst for the fresh waves of buying that sparked the late morning push, we’re mindful that European markets close at 11:30.
It’s likely investors gained confidence in the US markets after Eurozone markets finished the day with little spillover from the carnage that hit the streets of Paris Friday night.
There is no doubt that equity markets were due for some relief after the steady selling from last week.
Stock Market Seeks Follow Through
Consider that we had 3 days where broad market averages lost 1% or more. Additionally, the S&P 500 returned to negative territory YTD while losing its 200 Day moving average, while NASDAQ traded below the benchmark 5000 level and also lost its 2000 day MA at week’s end, albeit by only ~0.5%. Oil and Oil stocks saw steady liquidation as the relentless inventory build has heightened “supply pressures” on Crude, and everything crude related.
By the end of a week in which Oil lost 8%+ and stocks retreated 4%+, investors and traders were looking to buy any weakness Monday morning.
Where do we go from here: This is a very big earnings week for retailers. It’s likely we’ll have earnings reports Tuesday morning from WMT, HD, TJX and DKS, before this note goes out, with more to come from retail land the rest of the week.
WMT Trading Higher Pre Market
While expectations from WMT have been tapped down about as low as they can get, investors are still looking for good news from HD this morning and LOW tomorrow morning.
Away from earnings, keep a close watch on any hints from the Eurozone on how hard the ECB might hit the QE accelerator next month, as well as any banter from FED speakers and watchers as to whether the upped ante on the terrorist front lessens the odds of an initial rate hike in mid December.
At last look this morning the 2 year note is yielding 0.86%. That’s at least 0.05 higher than it was going into the September FOMC meeting.