Caveat Vendor

The market has been heading lower most of today. Perhaps after so many up days in a row, there was just a touch too much negative news today for even this grinding Bull to sustain. Questions over the quality of DBK earnings, the Ubisoft warning, profit taking in BP, negative chat about BG’s Corcovado well being dry (subsequently denied by the co.), light numbers from US Steel and further ruminations surrounding a Latvian devaluation have conspired to push us lower.

On top of that, we’re teetering on the edge the two week uptrend in the market breaking down (although remember the recent head and shoulders that wasn’t)

and, although only anecdotal, from those I’ve spoken to on the sell side, their flow has been net for sale. While this is not hugely interesting, what is interesting is that their order flow has been heavily skewed towards institutions as opposed to hedgies. The long guys have been taking profits on some of their winners. Who knows how long this lasts and we’ve certainly seen the market snap back pretty sharpish from what looks to be the start of a sell off. Still, it all feels a bit soggy, so much so that the “good news” that house prices had only fallen 17.06% YoY (instead of the expected 17.90), has failed to buoy us.

Meanwhile the Aussie and Kiwi have continued their recent rally with both hitting 09 highs thanks to comments from RBA Gov Stevens about Australia’s relative health, sparked speculation of a rate hike. They’ve given back a bit however as the risk off trade takes a tentative, Mr. Burns like grip on the market this afternoon. Speaking of risk off, it certainly is the defensive names which are performing today; pharma, telco, utils and the food & bevs in the blue. Even DXY is up today, so far anyway.

In spite of all this, I’ve still got to think there is a decent call of caveat vendor. There’s been a lot of negative news today yet we’re still essentially flat. I can’t help thinking if a similar amount of positive news came out, we’d be a lot higher. Heck, we’ve had a couple of weeks of pretty average underlying earnings manipulated to beat undercooked analyst expectations and that’s been treated as positive. And we’ve got consumer confidence coming up now, all important in telling us where the stock market was at the time of the survey, so I can’t imagine it’ll be a negative number.