But, the stock market has been probing for a level that discounts known negatives, potential negatives and uncertainty that is the result.
The 8% plunge in stock prices that started in early May began to attract buyers on June 16 and again last Thursday and Friday.
Brooksie’s Daily Stock Market blog: An edge before the market opens.
Monday, June 27, 2011 9:23 am EDT
S&P 500: 1268.45
Nasdaq Comp.: 2652.89
Russell 2000: 797.79
Little has changed with negatives, including the slowing of our economy, the European sovereign debt crisis, the Fed, and Congress’ decision on debt reduction and raising the debt ceiling to avert a U.S. default on certain obligations.
Nevertheless, institutional money managers must put client money to work and an 8% discount in prices (some more, some less) is good reason to do some buying.
Because some of these negatives can change overnight, removing some of the uncertainty and bingo, you have a meaningful rally.
The Greece “situation” goes to the wall Wednesday with lawmakers there voting on austerity measures, a must if they are going to get further help from European countries.
The Fed has already indicated it will continue an accommodative stance through year-end.
And odds strongly favor an accord in Congress over at least the framework of a debt reduction plan going forward, resulting in the raising of the debt ceiling.
My target date for that is July 29 or August 1, but powers greater than those held by Congress may force a solution sooner, default however slight, would be too injurious to our country.
Today: Mixed at the open. Resistance without any changes in the overall picture is DJIA 12,048 (S&P 500:1283). Support is 11,095 (S&P 500: 1267). Odds favor the bears, but some buying in here by money managers may delay a resolution of the tug of war in this general area.
The writer of Brooksie’s Daily Stock Market blog, George Brooks, is not registered as an investment advisor. Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. Readers are expected to assume full responsibility for conducting their own research pursuant to investment decisions in keeping with their tolerance for risk
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