The market enjoyed its best week since March, showing signs that while problems persist and question marks hover like dark clouds maybe stocks are up for climbing that wall of worry. In April, a series of events took a steep incline of concern and turned it into the kind of wall not easily eclipsed. A brick wall that actually drove investors the other way, while those that held their ground did so with eyes shut, lips quivering. None of the concerns have been wiped away. On the contrary, there is more evidence something is wrong, or something could go wrong.
The double-dip meter is spinning around like a weathervane in a Kansas dust storm, now pointing to a greater likelihood the economy will slip back into recession territory. But the market surged on Thursday and climbed off the canvass Friday, where up 38 points was much more impressive than up 270 points.
It’s important the market pick up on last week’s momentum, although I’m not sure where the spark is going to come from. Can this market, written off a few sessions ago, rebound like a Sphinx? Or will it go back to just stinking up the joint? One thing is for sure, the market is seriously oversold. I’ve said it before, oversold and overbought mean nothing until the turn; we have been reminded of the latter scenario in the rudest of manners.
But when it rebounds from oversold conditions it could do so like it did last year. Maybe a series of small sparks or “green shoots” rather than some major news item could be what makes the market move higher. It is my hunch that at some point a jobs report will beat the Street, sending stocks substantially higher even if the news is mediocre in the grand scheme of things. This week one of the most important earnings reports could come from Lazy Boy (LZB), a stock which acts great. Don’t forget that disappointing retail sales report last week saw a bright spot in furniture sales. LZB is the largest furniture retailer in the country, and the stock has been acting great.
Then there’s BP, which will be in the news all day, every day. President Obama is heading back to the Gulf of Mexico and then speaking to the nation in a nightly address. Tony Hayward, CEO of BP, will have to face congressional grilling, and there’s talk of a fund being established for the families and businesses in the Gulf. Initially, scuttlebutt had it the White House wanted BP to make payments to them and then have the government distribute the funds.
That was preposterous, so now it’s about a third party holding the cash…no word if they are considering Goldman (GS). I think that’s a bad idea, too. It has nothing to do with confidence in this Administration; it’s just another one of those things that pushes us down that ever slippery slope. BP should not pay a dime to any government escrow account.
Charles Payne is the CEO and Principal Analyst of Wall Street Strategies . This post was republished, with permission, from his company’s column, WStreet Market Commentary.