A Decent Showing

 | Jan 06, 2012 | 4:45 PM EST  | Comments
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The first week of 2012 is in the books and it wasn't bad. We managed a gain of 1.58% in the S&P 500 but if you bought the SPDR S&P 500 (SPY) at the open Tuesday and sold at the close today, you just about broke even as the majority of the gains came over New Year's weekend.

On the other hand, we did have good intraday trading opportunities as dip buyers jumped in on soft opens three straight days. The bounce was a little less energetic today, but again, we managed a decent recovery and had good support. When the dip buyers are busy, that usually bodes well.

Probably the most notable development this week was that we ignored poor action in Europe. Better-than-expected jobs news was the main reason for that, but I expect it also had something to do with positioning and the various games that occur at the start of a new year. I don't think we've seen the last of Europe, but perhaps we will see a little less sensitivity to it -- unless some new drama develops.

Earnings are coming, so next week will be all about expectations. I've mentioned the high level of earnings warnings we have seen already and one report indicates that warnings are at the highest level in more than a decade. That has to matter to some degree, and certainly in specific cases, but the market doesn't seem to be in any rush to lower expectations. We'll have to watch carefully for signs that we are more aggressively pricing in diminished expectations.

The price action is definitely bullish, but the mood seems rather complacent. We sill have little in the way of leadership or themes. It is an environment where you can knock out a few trades, but not one where you can be highly aggressive -- unless you really like rolling the dice. Unfortunately, that feels like the new normal these days.

Have a great weekend. I'll see you on Monday.

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