My Tauntaun Freezes At The First Marker

Equities start the day higher after my Tauntaun freezes at the first marker. Seriously, I’m about to hit a 10c on the dollar bid for my home because living in the Midwest has become dangerous to my life. -50F with wind chill? Come on MAN. Yesterday was colder at O’hare than the South Pole, did the world flip upside down? Luckily there’s a lot of action in the stock market to heat things up. Wait…what’s that you say? The first 3 closes in the S&P were 1,831, 1,831, and 1,826? Ugh. And to make matters worse we haven’t had an up-close the entire year. Want another crazy stat? The S&P hasn’t had 4 down days to start the year since the last Ice Age. Thankfully it’s not…ummm.....where was I going with that? So why the quiet markets? Where’s all the steamy price action? I think two things are holding it back: earnings and momentum. Earnings kick off Thursday with AA so I imagine people aren’t keen to make a move before then. As for momentum it seems to have stalled out, people appear to be waiting for someone else to make the first move. In these type of “tread water” situations whatever the first big move is will be the near term path of the market. So keep your eyes open and stay warm. As for me I’m gonna cut this tauntaun open and jump inside because it can’t possibly be worse than my current situation. Polar Vortex? I may as well live on Mars.

After the open we got another market that was as exciting as watching people throw boiling water into cold air. That is to say it was boring, so for the love of God stop it. Even thought it was quiet we did manage to put together a decent morning rally. Why the sudden change of heart? A couple things 1) three days of sideways/down wouldn’t last forever. We scraped off the overbought conditions so it’s time to move on. 2) Another data point showing animal spirits howling: an Irish Bond Auction. In their first auction since leaving the International Bailout program Ireland received €14B in bids for €3.7B in bonds. Guinness for everyone! Honestly has anyone ever made money shorting the Irish? And even if they did would they want to keep it? God loves the Irish, he won’t let them fail (I still despise ND). I maintain that Europe will lead the global recovery in 2014 or at least provide dramatically increased support to the Worldwide picture. 3) The move in Financials. If you haven’t noticed banks have been the place to be for the first few trading sessions of 2014. BAC, C, and GS are just a few of the names that are breaking out. Is the market going to auger into the ground with financials pushing higher? I doubt it. Anyway, we finally saw green numbers out of the major indices and by lunch we sat on 1,838, up 63bps. Not bad, feels like this year started off tip toeing instead of bum rushing.

The back half saw a small dip but a rally to close right where we were at lunch, 1,838. Have you ever noticed how much I say that? We closed where we were at lunch? I may need to do a study here, feel like I write that a lot. So there you have it, the first up day of 2014! Cue the fireworks and music! Earnings and Friday’s Jobs report are your next two catalysts. As for that jobs report we are looking for good news, we are no longer in a “bad news is good because it means more Fed” market. We need 200k+ and less than a 7% rate for new highs. Bring it on because everything seems to be going sideways. Final Score: Dow +62bps, S&P500 +61bps, Nasdaq +88bps, Rus2k +99bps.

News Highlights:

Well I spent a good amount of time looking for a funny video that had to do with cold weather. As I mentioned earlier all that exists are stupid people throwing water into the air. Sigh. Anyway I thought this was one was pretty good, give it a shot.

Have a good night