"In a democracy, someone who fails to get elected to office can always console himself with the thought that there was something not quite fair about it."
--Thucydides, 'History of the Peloponnesian War'
Monday morning strength after poor action on Friday is a common occurrence in this market. Although it is probably a function of algorithmic and computerized trading, that doesn't stop the business media from searching for a convenient headline to explain the action.
The easiest headline is the presidential debate drama. After Donald Trump's video fiasco on Friday and the debate last night, many folks are looking at the peso as an indicator of how the market views the election. The peso rallied on the view that Hillary Clinton is friendly to Mexico and is taking the lead.
In addition, some pundits argue that the market prefers Hillary Clinton as she provided greater certainly than Donald Trump. Even Trump supporters are likely to agree with that logic, which is part of the reason they are supporting him.
With this news flow the obvious headline is that Hillary is gaining in the polls, which is driving the market higher. Perhaps, but there is plenty of other news out that will be an issue.
Deutsche Bank (DB) is receiving attention again as it tries to put together some sort of deal to shore up its balance sheet. Twitter (TWTR) is down sharply again on news that Salesforce.com CRM will not be bidding for the money-losing social network. News in the biotechnology sector is propelling Myriad Genetics (MYGN) higher but Tesaro (TSRO) and Bristol-Myers Squibb (BMY) lower.
The net result of the news flow is that the indices are set to recoup Friday's losses and all those anticipatory bears who thought we were ready to break down look foolish once again. The market is still in the middle of a trading range and there is no clear trend in place.
There has been a more negative feel to underlying action lately as some of the speculative action in biotechnology, China-related issues and chips has cooled off. The rally in banks indicates some interest- rate concerns, but there just isn't enough of a shift in anything to declare a change in market character.
One piece of good news for traders is that earning season kicks off this week. We have a few reports early in the week and then a few big banks before the more important reports roll in next week. Earnings reports always hold the potential for some good individual stock picking if nothing else, and that is especially helpful when dealing with these very long and tedious trading ranges.
Eventually we are going to break out of the trading ranges that have been ongoing since July. It is likely to become very dramatic very quickly when it happens, but in the meantime there is little choice but to stay patient and focus on finding some good trades rather than time the market.