That’s been hard to figure lately.  Uncertainty has not eased.  Not in Europe.  Not in the Middle East. Not in China or Japan. Not in the U.S., with a dead-heat election battle and unknown future Congressional dynamics.  Companies overall continue to beat earnings, mostly, and miss on revenues.  Now there is a certainty: earnings cannot keep going up if revenues keep going down.

After two consecutive weeks of more than 200 basis points of growth in S&P 500 market prices, resulting from general enthusiasm over the stimulus decisions of the ECB, Fed, and Japanese Central Bank, the market took profits relatively quietly last week. Last week’s economic reports were generally flat.

The market did rebound last week, but it’s not much to brag about. Large-cap Value led the style/caps, up a paltry 1.42%, while Mid-cap Value dropped a tad, down -0.11%. It’s worth noting that Large-cap Value led not only last week, but last month and the last 3 months (see market stats). While it hasn’t been that great over the past 3 months, it has been the best of the worst. 

A weekend of more election surprises in Europe, as a socialist candidate won a key state vote in Germany, threatening Prime Minister Angela Merkel‘s stance on austerity in the Eurozone. The Greek “leadership” has all but abandoned hope of forming a new elected government, likely requiring yet another vote.

Fed Walks Fine Line Between the Short-Term & Long-Term

by David Brown, Chief Market Strategist, Sabrient Systems

The abundance of news last week -- most with a positive slant -- finally boosted the S&P 500 out of the Channel of Gloom in which it was mired for so long. Not only did the S&P 500 break out of the channel, but it is now threatening the 200-day moving average, having surpassed the 50-day MA last week.

We enter a new month this week mired in a persistent global malaise.  The weekend increase in Israeli-Palestinian tension doesn’t help, nor does the continued inability of BP to deal with the largest oil spill in history.  Economic news this morning was positive but without sufficient importance to do much more than soften the opening gap down.