We have a big week ahead for news and economic data. As I have noted in recent updates, economic fundamentals have had little bearing on stock price movement. In fact, the opposite has been the case. Whatever happens with stock and bond prices is selectively used to spin the data interpretation. That was a challenge this week since the economic reports were very good.
For now, it appears that Santa is off course or else planning to deliver a lump of coal. But maybe, just maybe, there will be a year-end shift in sentiment. If so, we can expect the punditry to make a quick shift to asking:
What might go right?
You would not realize it from reading your daily news, blogs, or watching TV, but mainstream thought remains quite positive on the economy and stocks.
Last Week Recap
In my last edition of WTWA I took note of the dire news and recession warnings. For investors focused on fundamentals, I suggested there might be a chance for some holiday shopping. After an early-week bounce, that proved to be correct.
The Story in One Chart
I always start my personal review of the week by looking at a great chart. This week I am featuring Jill Mislinski. She includes a lot of relevant information in a single picture – worth more than a thousand words. Read the full post for more great charts and background analysis.
The market declined 1.3% for the week, but it probably felt worse to most observers. The sharp selling after Tuesday’s strong opening created a lot of buzz. The end-of-week decline felt even worse. The trading range was 3.9%, lower than recent levels but still elevated. Readings on actual and expected volatility are included in our Indicator Snapshot.
The sentiment is partly driven by
