Enis’s Macro Wrap – 1400, We Meet Again

by Enis August 24, 2012 7:27 am • Commentary

The S&P 500 has spent the last 13 days trading above the 1400 level, the longest stretch since the winter of 2007.  There was much talk of a bullish breakout earlier this week when the SPX broke to its highest level since May 2008.  The market feels strong.  It goes up on good news, but not down on bad news.  Blindly buying has proven to be a profitable strategy.

But again, prices for many stocks are near 2007 levels.  Near their 2007 levels – when expectations for the future were perpetually rose-colored.    It was the height of folly to sit comfortably on your positions back then.  And a year from now, it will likely look like the spring and summer of 2012 was the height of folly once again.  In the meantime, the market hovers around 1400.

The event calendar for global markets picks up in the next month.  First is Mr. Bernanke’s Jackson Hole speech next week.  The following week brings the nonfarm payrolls report on Sept 7th, which holds special weight given that the Fed decision looms on Sept 13th.  Perhaps most importantly though is the German Constitutional Court decision on Sept 12th.  The ECB stated this morning that it will wait for that decision before implementing any new bond buying plan.  Traders the world over will be placing bigger chips on the macro board in the first 2 weeks of September.

Overnight price was very light in stocks, as Asia opened down 1% and hardly moved from there, and Europe is slightly lower, along with SPX futures.  The dollar and Treasuries are stronger and commodities are weaker.  And the market watches 1400.