All eyes were on the ECB rate announcement and following press conference. Unfortunately for European stocks and yields the ECB did not deliver what the market expected. First, it was Ben Bernanke and the US Federal Reserve not announcing QE3 and now the ECB failing to deliver buying bonds outright. Initially, the NASDAQ received a ton of support in the morning session and appeared to be on its way higher. However, as the European markets dove to new lows prior to the close US stocks simply couldn’t hang on to the move off the lows. The final hour we did see support, but buyers simply could not push the market back above the unchanged level. Now the market awaits the July jobs report and it too will be a market mover.
Last week’s rally into the end of the week has yet to see any follow-through at all. In fact, we are down four straight days. Not typical of a new uptrend and just another sign of the chop and slop summer trading has been this year. Who knows what tomorrow’s jobs number will bring but the most important piece will be how it reacts to it. CNBC will have its pundits rolled out ready to bring as much noise to the table as possible. We’ll pay attention to how price reacts to the news and follow our disciplined approach. We’ll leave the guess work to the amateurs.
This week’s AAII sentiment survey was released showing the number of bears coming down from the low 40s to 35%. Bulls moved back above the 30 level, but those who are neutral in the market continue to dominate this sentiment reading. It is easy to why the VIX is so low showing a lack of fear. We can just point to how many of those who are neutral. If you are in cash how can you be fearful?
We now have the Fed and ECB out of the way and the jobs report tomorrow it will be nice to enjoy a summer weekend! We remain cash heavy at this point in the game with the level of chop in the market it has made it really difficult to hang onto positions. Keep it small until you see gains pile up. Always cut your losses short and enjoy the weekend!