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Bull or Bear

November 21, 2011 – 5:56 pm

As the market performs its knee jerk reaction to the super committee’s failure, stock prices started the day very weak. The market reaction should not be any surprise but it likely won’t last. Most of the reaction was because it was a surprise
that the committee didn’t run its full course which would have been until Wednesday. Both sides are looking forward to the election and positioning themselves for talking points rather than actually agreeing to something important. Still, the stock market expected little from the committee so the reaction to their failure should be muted.

Since it is the holiday week, trading volumes will be low which tends to make stock movements a little extended both up and down. We did have housing numbers released this morning. The October existing housing sales was a small surprise with a rise of 1.4%. That is a 4.97 million annual rate when the expectation was for it to be 4.8 million.

So with little in the way of economic numbers and less traders on Wall Street this week the market can and does move erratically. In addition, the recent signs of a stronger economy here in the U.S. and a seasonally strong time of the year, the recent weakness in stock prices appears to be consolidation from a very strong October rather than a return to a bear market.

Good Trading,
Steve Peasley

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