The Sound Of Silence
That great
big sucking sound that was heard last week and is being heard again
this week is the sound of the market pricing in the notion that perhaps, just
perhaps, there won’t be a second-half recovery.
Or if it occurs, it will be more muted
than thought at the start of the year.
If the market was truly fixated on an
intermeeting cut, the a.m. release of February confidence, which came in at its
lowest read since July ’96 and substantially below the Street forecast, should
have sparked a rally.
It did, for all of an hour.
Which says the market is holding out
for the real McCoy in the form of improved earnings visibility, not just the hope
of better visibility via more rate cuts.
Of course, at some point this will
change to a renewed emphasis on cuts.
But it hasn’t yet.
If a stock like Cabot
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leader among the glamours over the past six weeks, breaks down, as it has done
over the past week, that should tell you something about the speculative
sentiment.
Ditto for the tawdry action of
Microsemi
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Otherwise, Calpine
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As does Chicos FAS
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And EFunds
(
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Meanwhile, the technical health of the
retailers and financials will be important going forward.
If these broad segments break down in
earnest, there will be no clearer message that all bets are off for the economy
being able to sidestep recession, as it has thus far done.
Of course, the successful intermediate
trader understands that the market discounts the future into the today.
Which is why bull markets often begin
once news of a recession is made official.
Ergo, keep your eyes on what you see,
not what you hear.