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1) More Lousy Data
Post-Brexit, one pleasant surprise we've seen has been a pretty nice streak of positive economic data surprises.
But starting with the 7/29 GDP report, we've seen quite a few lousy reports, culminating in today's Empire Manufacturing miss.
Individual economic data points are little more than noise. The trend is far more important.
Look at this chart of the Citi US Economic Surprise Index — it is definitely sliding.
For now, the weak data is being ignored.
But I wonder if that changes with the avalanche of big reports coming over the next 2 days (Housing Starts, Building Permits, CPI, Industrial Production, etc.).
2) Can't Argue With the Results
Crude oil got shaken up by this morning's Interfax report that OPEC will not pursue an output cut at the September meeting.
However, oil prices surged right back and oil stocks are outperforming the major indices.
It's probably best if traders do not expect an output cut.
Last time around at the 6/2 OPEC meeting, traders came in expecting a cut and didn't get it, and that was right near the interim top in oil.
3) Mr. Russell
One common complaint the bears are throwing around is that the Russell 2000 has not confirmed the all-time highs in SPX/DJIA/NASDAQ/NDX.
It would be nice if the Russell could make new all-time highs, but there's no so such thing as a perfect bull move.
Besides, the Russell is rapidly making up the difference and outperforming SPX today by a more than 2:1 ratio.
Biotech is back on the warpath and making its way toward IBB's $299.49 high on 8/4.
Round numbers are meaningless but I bet traders would be excited to see it make a clean move about $300.
And better yet — XBI, which is more representative of the broader spectrum of biotech stock — is outperforming IBB by a big margin today.
IBB makes bigger headlines, but XBI is actually more important.
5) Headline of the Day
There's something odd about declaring that the market “now makes sense” after a series of record highs, and adding that “there's a lot to like in a market as hated as this one.”
This article “feels” like the type of thing you would read towards the end of a frustrating rally — not the middle of one.
That said, the bulls are putting on a good show today and again, I don't argue with the results, even when they hurt me.