Friends
The week got off to a very rocky start, as market participants shrugged off Friday’s attempt to calm things, and instead focused on continued deterioration in the Eurozone. With the EU summit scheduled to start later in the week, traders are becoming more and more convinced that Europe is about to implode and the powers that be, can’t agree on any political solutions. Also this morning, despite a decent new home sales number, traders were expecting the Supreme Court decision on Obama Care, and instead found out it won’t come most likely until Thursday.
With all this as a backdrop, stocks fell early and often, with the Dow Jones Industrial Average down 138 points to close at 12,502. The S&P 500 took a 21 point beating to finish the day at 1313. Gold rallied a bit with the precious metal gaining $17 to trade at $1584 per ounce. Oil was down $.41 to finish the day trading near $79.35 per barrel WTI.
It seems now we are on hold for the week, for it will be a few days before we get the Supreme Court decision and the EU summit. In the meantime, traders are starting to fret over the coming earnings season, as recent warnings are indicating that this might be the most challenging one in some time. Remember, valuation has been one of our items on the positive side of the ledger, but if earnings begin to slide we could start losing that one also. If the S&P cannot earn $100 per share, then S&P 1300 will become more expensive than had been expected ($1300 divided by $100 equals 13 times earnings, $1300 divided by a smaller earnings number gives you a higher/more expensive multiple).
This week also marks the end of the quarter, so we’ll see if underinvested hedge funds want to use weakness to add positions for a little “window dressing”. We’ll let you know how the week proceeds.
Have a nice evening everyone.
