What an interesting morning and an even more interesting juncture in the rally. The market is shrugging off the wildly bullish news out of FedEx in favor of the bearish data from McDonald’s, MMM (and then there is the much overlooked German industrial production #’s). McD’s sales disappointed for the quarter which is pointing to weak consumers while MMM said the recovery was going to be “patchy” and issued 2010 guidance that was pennies below expectations (this looks like a classic UPOD case in my opinion). Meanwhile, we have the economically sensitive FedEx issuing guidance that easily topped estimates. They attributed the strength to foreign growth and cost cutting. With 50% of S&P revenues now outside of the country and the margin story well intact, I have to think FedEx is the more important story with regards to this upcoming earnings season.
Investors are still buying the dips. The Nasdaq 100 is going positive as I type. I remain an investor who lacks conviction going into year-end. My bias is bullish into the next earnings season (based on my preliminary earnings work) with a still bearish macro outlook (the back half of 2010 & 2011 could get very messy again), but I am beginning to think the exciting 2009 will end a snoozer. In other words, I will waste plenty of ink discussing a market that goes nowhere.
I am beginning to piece together my 2010 outlook. We are at a critical technical and fundamental juncture in the equity markets. Will that 50% retracement level serve as a brick wall for the rally or will it serve as a launching pad as Jeff Saut thinks? I am beginning to think it might serve as neither, but rather a prelude to what will be a very boring 2010 in comparison to 2009 & 2008.