With index futures up nearly 1% ahead of regular trading hours, I was quite curious to see if stocks would walk the walk. Over the first half hour, the action seemed tenuous, giving me the impression that the bulls didn't have much firing power. Based on this impression, I re-established my SanDisk short and kept an eye open for other opportunities, though I saw none that excited me. It took another hour for things to start breaking down, and even then, the selling wasn't really decisive.
The next span of trading which portended to be meaningful was the last hour. Who would fold their cards faster going into the weekend? Up until the last ten minutes, the final-hour action was about as exciting as watching a defensive soccer game. Then stocks dove into the close to go out on their lows for the session. Bulls have to be disappointed at the lack of follow-thru to yesterday's reversal. They simply don't have the same pull they've enjoyed on the dips of the last three years. Of course, the bears hardly broke any selling records today, so overall it seems we just get more ambiguity.
At the risk of being annoyingly repetitive, this ambiguity applies only to the near-term. Before the end of the year, I anticipate stocks to be offered at much lower prices than they are today.
Bonds extended their recent rally, helping drop the 10-year Treasury yield under 5%. In case anyone cares, the yield curve just inverted again, but we probably won't be treated to much banter about the situation since the last time the curve inverted, all the experts decided it didn't matter anymore. I wonder if these experts will sing the same tune when stocks are 20% or 30% lower and the economy is screeching to a halt because a big truck labeled "housing" decided to stop in the fast lane.
Speaking of housing, homebuilder shares receive a brief reprise today, probably boosted by the performance of bonds, but their volume dried up like a sponge in the Arizona sun. Despite the bashing they've undergone, selling into the weakness may still be a viable strategy. We've got the weekend to ponder it now.
For weekend reading, I highly recommend Martin Goldberg's most recent post.
Disclosure: Short SNDK; Long SNDK Puts