With apologies to Chicago’s own Buckinghams, today was a classic example of “buy the rumor, sell the fact” as the S&P 500 first spiked 29 points or 2% higher last Thursday and Friday (July 26th and 27th) following European Central Bank President Mario Draghi’s statement that the European Central Bank was ready to do whatever it takes to preserve the common-currency union. However, so far today the US broad market index has already given back about half of those gains in just a few hours as last week’s raised expectations for European Central Bank action were quickly dashed by Mr. Draghi in his comments this morning.
There were, however, several key market factors heading into this week which warned that the US stock market was much more vulnerable to being disappointed than pleasantly surprised by the news coming out of Europe this week. This had to do with the collective demeanor of investors going into the release of this week’s important economic news and data, which is often more immediately influential on financial market direction than the actual data itself.
These key factors were displayed and discussed in Monday’s Keys To This Week report and again in yesterday’s (August 1st) Asbury Alert entitled US Equities Vulnerable To Near Term Disappointment This Week. Both reports are available in our Research Center, which clients/subscribers can access via the big gold button at the upper right corner of this page.
We also mentioned in our July 31st blog posting (available to non-clients), entitled US Stocks At (Another) Key Decision Point, that the US stock market was at an important inflection point this week.
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