RSSWatch How the Market Handles Bad News
By Jim Slagle | November 17, 2008 | 12:33 PM | 0 Comments
Sitting here on my perch over at greenfaucet's worldwide headquarters, I am fortunate enough to see a myriad of incredible content flow through here from some of the most astute financial minds anywhere. Ok, shameless plugs aside, one thing I haven't seen addressed much lately is how the market is interpreting bad news. For the past several months, the news flow has been progressively awful and the market has reacted accordingly. However, the past week has been different. Putting Thursday's massive reversal aside, there have been some notable and distinct occasions recently that the market has not sold-off on terrible news:
1. Intel's dire outlook: Overnight futures were down big but we managed to fight our way back throughout the day.
2. Retail Sales: Friday's unprecedented (terrible) retail sales figures were essentially shrugged off after a lower open.
3.Today's GM news and massive Citigroup layoffs: As I write, we have reversed from a 200 point gap down on the DJIA.
That is a hat-trick my friends! Does this mean we will scream higher? Not necessarily, but it is definitely something to keep your eye on and could indicate that short-term selling pressure has been exhausted. Keep in mind too that hedge fund redemptions are coming to an end and many market participants are eyeing a Santa Claus rally during this typically seasonably favorable period.
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