Charts are rolling over, the economic data is rolling over and no one yet knows how abruptly the effects of QE2’s wind-down may manifest themselves.
Dave Kansas at WSJ MarketBeat has done an excellent job in explaining this market moment this morning…
The Soft Patch seems firmly in place. The big question haunting markets: will it evolve into something worse?
Last week, the Dow Jones Industrial Average fell 290.32, or 2.33%, to 12151.26, its fifth straight losing week. The Dow hasn’t put together a five-week losing skein since the summer of 2004.
The Dow still clings to a 4.96% gain for the year, and other major averages are also still up for the year. But momentum certainly seems to be headed the other way, and there aren’t a lot of obvious catalysts in the coming week that could spark a change in sentiment.
Dave goes on to explain that the bottom-up guys are still looking at earnings growth (like they always do) which is a clear positive for the bull case – but earnings season is a month away and all we have in the interim is headline risk out of Europe and our own econ releases which have not been kind of late.