Disappointing Economic Reports Fail to Bring Down Stocks
Seeking Alpha Analyst Since 2008
The market digested a few economic reports, two being very disappointing yet the market was able to hold up. Leading indicators dropped to -.3% the first negative reading since last June and worse yet Wall Street expected a positive reading of .1%. To piggyback on top of the Leading indicators was the reading out of the Philly Fed index was disappointing showing manufacturing fell in the Month of May to 3.9. Wall Street expected the index to show a reading of 20.0, it appears the economy continues to be weak. Jobless claims came in better than expected, but continues to run above 400,000. Despite all the negative news from economic reports the market was more focused on LNKD stock than economic conditions.
There was a ton of hype heading into LNKD stock first day of trading. IPOs are always a mixed bag, but this was the first social networking stock to hit the market. At points during its trading session the stock traded more than 1400 times earnings! It reminded a few of the good old days of the late 90s where IPOs would rocket higher after coming public. We’ll see how LNKD stock reacts to the rigor of stock market trading, but for now we’ll be patient for the stock to form a base.
Sentiment is an interesting topic to cover here. This past week we saw an interesting move in the AAII Bull and Bear index. There are more bears and less bulls than we saw after the Japanese Tsunami and Nuclear Castrophe! AAII Bull index showed bulls dropped to 26.69 percent while bears jumped to 41.29%. The readings aren’t at extreme levels by any stretch of the imagination, but they do show market participants certainly got bearish with the market still within multi-year highs. Remember, sentiment should not be used as a trading signal, but more of a guide. What is special about how we approach stock market trading is our opinions are left at the door and if this market wants to move higher we go along with it.
Day three of an attempted rally was not much of a day! Stay prudent and keep a watchlist ready of this market confirms a new market rally.
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