Big Day for the Stock Market… Twitter, ECB, GDP
The media and masses are all keenly focused on Twitter’s overblown IPO. Too bad you can’t trade it to the short side. Already, some knucklehead paid north of $50. Do people ever learn? While I do not think we will ever see the tech mania like the Dotcom bubble again in my lifetime, we are certainly seeing froth in the social media space and that’s not a good thing!
The real news of the day that is now only a footnote is the unexpected rate cut by the European Central Bank. Although, this is LONG overdue, the Europeans have been about jawboning and threatening the markets rather than action. With inflation in collapse and deflation creeping in, we are getting much closer to what I have spoken about since 2010, QE Europe. The ECB is trillions behind and better get their act together!
U.S. GDP growth came in much higher than expected for Q3, another piece of positive news this morning. So with Twitter, ECB and GDP, you would have expected another romp into new high territory. However, the bears look like they are finally making a meaningful stand. A lot can happen by 4pm, but at this point, it looks like stocks are in routine and healthy pullback mode of 2-6%.
Adding to the notion of some weakness are the recent sentiment surveys which show far too much bullishness among newsletter writers and the public. With the employment report tomorrow morning and the poor showing this morning, a strong open on Friday could be a nice short-term selling opportunity.
As I discussed, http://www.investfortomorrow.com/newsletter/CurrentStreet$marts20131105.pdf and http://investfortomorrowblog.com/archives/789, I do not believe the bull market is over and we should still see higher highs after this pullback.