Seeking Alpha
Long/short equity, growth at reasonable price, research analyst
Profile| Send Message| ()  

The market surprised us this morning with a strong performance. It could be supported by confidence in Housing, as existing sales were better-than-expected and downright positive (stay tuned for more numbers from housing sector tomorrow). Or it could be a technical move off of support at 1343 for S&P 500, which would be nice if the market recognized a healthy 10% sell-off and is now moving forward. But we remain skeptical. Overnight, a surprisingly positive tone in Asian and European markets further buoyed the market upward.

Treasury yields are higher on fiscal cliff worries, but the equity markets seem to be encouraged by the latest promising statements from top negotiators. Whether we fall or climb is the big $64 trillion dilemma.

This is a very hard market to call. Apple (AAPL) is up sharply despite heavy selling by investors with large profits from the past year's run-up in anticipation of a higher capital gains tax. We have not heard any hints that capital gain tax increases are "off the table." So what is going on?

Last week was a genuine "flight-to-safety" with Consumer Non-Cyclicals the only positive sector followed closely by Utilities, Financials, and Healthcare. Technology, Industrials and Basic Materials did worst, as expected, during a flight-to-safety week.

What happened over the weekend? Not clear. The Middle East continued with heavy, if not shocking, violence with little hope for a ceasefire with respect to the Israeli-Hamas conflict. Ditto Syria.

Caution should probably be the attitude until matters clear a little more. A fair amount of economic data is expected in the next two days with the Thanksgiving shortened trading week. All indicators are expected to be weaker and in some cases sharply lower as the Empire Index, Philly Fed and Industrial Production were last Friday. But, then again, so was the expected number on existing housing sales. Mid-caps continue to look attractive.

Here are the Market Stats.

3 Stock Ideas for this Market

This week, I created in a custom search focused on value, growth, and positive earnings strength. Here are three you may find interesting:

Delta Air Lines Inc. (DAL) - Industrials

Textron Inc. (TXT)-Industrials

SunTrust Banks Inc. (STI)-Financial

Source: A $64 Trillion Dilemma