19:40 GMT: When Wall Street closed on Monday, the S&P 500 sat at a fresh 15-month high of 1,147. Since then, the market has received a rotten start to the US fourth-quarter earnings season in the form of a big profit miss by Alcoa; a tightening of Chinaâs monetary policy; and the Obama administrationâs proposed $90bn levy on US banks . Oh, and thereâs the Google in China dispute â a spat that has the potential to develop into a trade war â plus Thursdayâs softer-than-forecast US retail and jobless claims data. The result of all this? The S&P 500 is at 1,149, up 0.3 per cent. This is truly the zombie rally â it just will not die. Optimists will say this is a classic characteristic of a bull market, where disappointments are quickly ignored or even interpreted positively â Wednesdayâs Fed Beige Book was sufficiently downbeat to discourage much talk of imminent interest rate rises, for example. Bears will moan that itâs a symptom of a liquidity-driven irrational exuberance. âThe markets in high-risk assets took heart from the Federal Reserveâs latest Beige Book, â noted Stephen Lewis at Monument Securities. âTheir reaction was characteristic of a mindset, typical when surplus liquidity is the dominant market influence, which searches for the silver lining to every grey cloud.â Still, the stock index levels speak for themselves. As do the levels of the Vix, Wall Streetâs gauge of expected equity market volatility. The Vix on Thursday remained below 18, close to 19-month lows - a sign, for some commentators, that investors are too relaxed. Earlier in the session Asian markets had reboundedfrom the previous dayâs wobble. The FTSE Asia-Pacific index rose 0.9 per cent, in spite of Japanese machinery order data coming in softer than expected. Indeed, the Nikkei 225 managed to also hit a 15-month peak, gaining 1.6 per cent as technology groups found favour. Shanghai retraced nearly half of the previous sessionâs fall, up 1.4 per cent, and Australia rose 0.6 per cent as labour data were stronger than forecast. Europe maintained most of a positive start, which reflected Wall Streetâs late rally off its lows overnight. The FTSE Eurofirst 300 rose 0.7 per cent, with better than expected results from SAP helping the mood. While the FTSE 100 jumped 0.5 per cent as miners powered ahead following news Rio Tinto had registered a huge rise in iron ore output. Confirmation that the European Central bank had kept interest rates at 1 per cent passed with little a do. âEventually, but probably not before the third quarter, the ECB may want to gently massage the market into expecting small official rate rises towards the end of the year,â said Nick Beecroft, senior FX correspondent at Saxo Bank. In commodities, gold rose 0.5 per cent to $1,143 an ounce after the dollar reversed its gains, losing 0.1 per cent on trade-weighted basis. Oil fell 0.4 per cent at $79.36. The Aussie dollar rose 0.7 per cent against the US dollar to $0.9301. âAustralian employment data again surprised to the upside,â said David Forrester at Barclays capital. âWe think that the Reserve Bank of Australia will raise rates again in February by 25bp to 4.00 per cent.â The US government bond market had its last big auction of the week: $13bn of 30-year notes. Like the other sales this week, it was pretty well-received. US 10-year yields fell 6 basis points to 3.73 as traders also noted the poor retail sales numbers. âThe modest pace of recovery is helping keep a lid on recent pressure that saw investors ditch bonds mercilessly over fears of a faster-paced recovery bringing forward a possible string of interest rate increases,â said Andrew Wilkinson, senior market analyst at Interactive Brokers. http://www.ft.com/cms/s/0/2808d27c-00db-11df-a4cb-00144feabdc0.html
s$p up 8 out of 9 days in 2010. The correction of 37 dow points on Tuesday, that was the buying opportunity of the year.....
Historically, "Decennial cycles have the worst record AND 2010 is a mid term election year which has the second worst record fo the 4 tear presidential cycle". So that being said, probably everything bad was priced in last years rally.