The stock market got off to a rocky start this week with the Dow opening 100 points lower and the other major indices following suit to varying degrees. The Street might have been more concerned with the Kentucky Derby, NBA Playoffs and plans for a summer vacation that seem to have already started. For what it’s worth China’s PMI came in at 48.3, in line with estimates and below 50, suggesting economic contraction. Also Pfizer (PFE) disappointed on the top and bottom lines.
If China’s slow-growth comes as news, you haven’t been paying attention and Pfizer clearly already knows it has a growth problem. As for Ukraine, file it under “horrible but not breaking” news.
As Phil Pearlman and I discuss in the attached clip, this morning is about two markets sitting on important lines. The 10-year note is at about 2.6% and the S&P 500 (^GSPC) failed to breakout last week. That gives yields support directly under where we are now and makes stocks better to sell.
In the absence of market-moving news traders defer to technicals and hackneyed notions like “sell in May and go away.” This week will see Yellen testimony, a huge release of Twitter (TWTR) shares into a market that clearly has no appetite for Twitter stock and a possible IPO from Alibaba.
In the early going the smart money will look to find dips to buy and nail down some travel plans for the next 4 months.
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