Although equities are only slightly down at midday (time of writing) on Monday, I don’t like the feel to the market today, and am avoiding putting new money to work.
10 Things I Don't Like In The Market Today:
- The failure of Zynga to hold its IPO price. This was one of the most anticipated IPOs of the year, and had a relatively small float as well. This does not bode well for future IPOs in the short term, and gives you insight on how the market feels about the “Risk On” trade currently.
- I don’t like the performance of the XLF today (see chart). The action in this key financial index is not encouraging.
- The turmoil in North Korea - how leadership transitions there could impact Asian markets and overall market confidence.
- The inability to get a deal on the one year payroll tax holiday extension is discouraging, as it again injects politics into market psychology.
- Getting the IMF on board for assisting to build a firewall for Italy and Spain seems to be going very slowly.
- I also don’t care for the discord and inability to speak with one voice of the ECB. This is not doing anything for market confidence.
- We only have a few more trading sessions before underperforming fund managers have any incentive to “buy the dips.” This has a significant tailwind for the market over the last month or two.
- The additional austerity measures coming from Spain. This will be repeating many times in the coming months and will dampen economic growth substantially in the eurozone.
- Bank of America (BAC) again at $5 a share. Although it has bounced off this level several times, this is not a positive for market sentiment.
- The capital flight out of Southern Europe certainly gives one cause for concern.
Be careful out there.