Market Sentiment Update

Sentiment was unchanged last week at 85 and the S&P 500 posted a modest gain of 0.3%.  The small cap Russell 2000 declined 0.2% and the NASDAQ advanced 0.4%.

The holiday shortened week proved uneventful as stocks continue to consolidate in a tight trading range on low volume.  The S&P has now traded a few ticks above the 2011 highs and finished the week at levels not seen since June 2008.  The small cap Russell 2000 is still about 4% below the highs posted last May.  Broad index participation will be one key factor for additional gains for the market indices. In addition, tensions with Iran continue to propel higher oil prices which is a potential drag on consumer spending.

This week will have lots of news on the economic front with GDP and manufacturing indicators coming later in the week.  Europe’s version of quantitative easing is the LTRO (long term refinancing operation) and the magnitude of the second auction will be announced on Wednesday morning.  This will provide some insight into the extent that European banks are relying upon the LTRO for funding.

We remain invested in equities as the BAMSI is positive.

Market Sentiment Update

Sentiment dropped 2 points to 85 as the S&P 500 posted a gain of 1.4%.  The small cap Russell 2000 advanced 1.9% and the NASDAQ gained 1.6%.

Markets have continued their steady advance of 2012. Eurozone leaders agreed to a yet another bailout deal for Greece over the weekend.  The funding of Greece postpones one major threat to stability in Europe.  The anticipation of this resolve has fueled the S&P 500 back to the highs of 2011.  While the index levels are similar to May 2011, the economic environment continues to show signs of improvement in both employment and housing data.  Since the BAMSI turned positive in November, the cyclical sectors have performed best with the financials and industrials posting the biggest gains. We remain invested in equities as the BAMSI is positive.

I will be on CNBC's Fast Money Half-Time show again tomorrow (Wednesday) at 12:00 pm Eastern / 9:00 am Pacific giving commentary on stocks and the market.

Market Sentiment Update

The BAMSI gained another 3 points on the week while the market was essentially flat on the week.  The major indexes have gained nearly 10% since the BAMSI turned positive so while the rally may not be over, a pause here and there is natural.

Although risk still remains in the Euro zone, the market continues to show confidence and resilience.  Yesterday's Moody's downgrade of Italy, Spain, and Portugal is a good example of this resilience as the market is showing relatively modest losses despite the bad news.

There are a few more weeks left in earnings season and the results so far have been quite good.  Nearly 70% of S&P 500 companies that reported have beat analyst estimates.  In fact, earnings have been so good that we are about to eclipse the 2007 earnings peak while the market still remains 11% below the 2007 highs.