If there is one thing the market hates the most, it is uncertainty. And the bottom line at this point in time is that there is a fair amount of uncertainty in the game. Suddenly there is new geopolitical uncertainty in Yemen as Saudi Arabia and friends launched attacks on the ground and in the air yesterday. Then there is the question if the Germanwings crash, which was declared intentional on Thursday, was an act of terrorism. And perhaps the biggest area of uncertainty continues to be what the upcoming earnings parade is going to look like. Now toss in more bad news in the semiconductor space (SanDisk guided lower, TSMC talked about the impact of the dollar, and Intel also mentioned the FX issues it is facing), the ongoing struggle in biotech, and the question of what the Fed is going to do next, and well, you’ve got a recipe for uncertainty on your hands. As such, it is not surprising to see the bears attempting to press their case.
Although yesterday’s intraday action remained volatile, by the time the closing bell rang, it appeared that the bulls had managed to hold off their opponents. However, in looking at the way the downtrends have unfolded since December, we notice that the declines have all included at least one “pause day” – I.E. a day in which prices paused or moved slightly higher before resuming the trend lower. As such, one could argue that Thursday was just such a day of rest for the bears. It is also worth noting that the uptrend line which could be drawn through the lows of October and early-February lows was violated on Thursday. As such, it appears that the S&P, once again, finds itself stuck in a sideways trading range.
S&P 500 Index – Daily
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Turning to This Morning…
Things are fairly quiet in the early going this morning. The geopolitical situation involving Yemen/Iran/Saudi Arabia continues to make headlines as the conflict, which now involves troops on the ground, has been putting a bid under the price of oil lately. However, Goldman is out with a note this morning suggesting that the near-term potential impact on production appears limited. In Europe, it’s all Greece all the time today as the country’s leaders scramble to try and get their ducks in a row in order to avoid running out of money in the next couple of weeks. Here at home, the final revision to Q4 GDP came in at 2.2%, which while below the last estimate, was not as bad as some analysts had feared. However, corporate profits fell by 3% in Q1, which is certain to attract some attention. U.S. stock futures are mixed with an hour before the opening bell.