The story of the day was CSCO and its reaction to its earnings release. PCLN didn’t’ fare well either as earnings disappoints. A slightly better than expected jobless claims figure helped the market in the early going, but the market quickly turned to sloppy trade just after the open. Volume was helped out by CSCO and PCLN, but failed to eclipse Wednesday’s level. The close didn’t help out matters as a rally into the close was unable to manifest itself. A weak close and a lackluster day lend itself to the negative side of the line and we’ll continue to operate in SELL mode looking for the market to head lower.
An interesting development on the sentiment front is not so much the number of bulls or bears, but the number of respondents who are neutral. Investors Intelligence survey pins bulls just below 40% at 38%. Bears managed to come in basically in line with prior week’s number at 20.4%. Neutrality appears to be the new game in town. Quantitative easing certainly has held bears hostage, but now neutral is perfectly an acceptable position. Not as dramatic as the II survey the number of bulls in the AAII dropped to 25%! Quite the drop as bears jumped to 42%. Given the drop in bulls I would have expected to see bears jump to 50%, but we didn’t see this come to light. Sentiment is negative which will likely lead to some sort of bounce. Until then, sell mode is in effect.
It won’t be long till the market will turn its attention to the fiscal cliff set to derail the US at the start of 2013. What a way to bring in the New Year! More taxes! Fiscal restraints must stay in place as spending has been the main issue for the fiscal mess we have been in. Spending must be brought back in line with revenues to produce surpluses to reduce the debt outstanding the United States currently has. It will be a bumpy ride and with an election year to toss in confusion anything will be possible and it is important to stay disciplined.
Get out and enjoy the weekend ahead.