Futures are up this morning. Once again in front of resistance.
Netflix was priced to perfection. It dropped nearly 5% after the close. With extremely light volume in the futures market, there is not much that can be read into yesterday’s trading action. Last week, the market went up on air and failed to break to new highs. Earnings do not seem to be the catalyst for that kind of a move. Bernanke press conference has significant downside risk to the market. In fact, I cannot see a positive reaction to what is a questionable attempt at transparency. Economic data does not reflect significant growth. It is mixed and seems very vulnerable. A minor slow down might have exponential impact on the overall economy. The thing that is most disconcerting is that there does not seem to be any realistic solution to the deficit crisis. There does not seem to be any solution to the unemployment crisis. The Middle East crisis is far from over. Syria may be the match that ignites an all out Shiite vs. Sunni civil war, as tanks are unleashed on civilians. The dollar will begin to strengthen. It is inevitable. Simultaneously commodity prices will begin to contract. Demand for oil will deteriorate, as supply disruption has been contained, though geopolitical risks remain. China will stop building empty cities, and it will be years before Japan contributes to global infrastructure growth. Will Europe resolve its internal issues? It seems unlikely. European governments excel at procrastination. China has implied that it might bail out Spain. What? The global finance plot is getting so convoluted that the idea of investing on fundamentals has become an enigma, a legacy idea from a simpler time, an unachievable goal. The firm is short the major indexes and long financials.
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