Maybe the Spell Is Broken

 | Feb 10, 2014 | 7:20 AM EST
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The spell for the year had said, "You had a good run last year but it's over for now." Did those last couple of days break that spell?

To me there wasn't much of substance to the rally beyond a bounce at some key levels and the passage of the employment number.

What surprised me Friday was that the rally was able to last throughout the day, even as there was nothing driving it.

When the employment number came out, the algorithmic cowboys emerged from the corral with guns blazing. Nobody talks about it much, but can you believe how wrong they were, and yet how much relevance and gravitas their first moves had with the crowd? It was almost as if they were outrunning a wave of selling.

But there was no wave of selling.

In retrospect I should have known this, as there was one stock last week that told you all you needed to know: Kohl's (KSS) -- yes, the decent discount chain that has been a serial disappointer. On Feb. 6, the company reported a preliminary earnings number of $1.53 per share when the Street was looking for $1.63. Fourth quarter comps were down 2%, and the company cut its forecast. The stock looked down big. Just like the futures on Friday.

Then Kohl's sprung back to life and rallied up $2. That was it. That was the sign that not only was retail overdone to the downside but that the entire market, which had been led down by retail, could recover.

That was the signal. A not-so-hot retailer reports a not-so-hot number and the stock goes higher?

Then we got the twin down openings of General Motors (GM) and Cummins (CMI) that then morphed into higher prices.

Same deal.

In the next 24 hours we had a dozen companies reporting news that should have driven their stocks down and, instead, they went higher.

Then the market was off to the races.

There's only one problem: The relief trade can't last without good data ahead, and I can't see any -- yet, at least.

Plus, the indices are leaving the oversold territory that had helped so much.

We'll know soon whether the bounce can continue. I see a host of retailers reporting that could let us down. If they bounce, it is game on. If they react rationally and go down, then the market should retest.

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volatility is quite low here, and we could see some downsides here in the short term. ...



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