There are always two ways (at least two ways) to look at everything, including the market. In fact, whether one looks at the market from near or far makes a big difference in what you see.
Like most complex equations with multiple inputs, synthesizing the different inputs is critical to what comes out on the other end of your equation.
In this case, I'm talking specifically about two inputs - the perspective from near and from far away.
And I am talking about how they affect one's view of what's happening in the market and where it's likely going to go next.
Thursday was a good example.
Early in the morning (in my travels), I saw that the Dow futures were up 82, and I thought, it could be a good day and we might finally tip the scales resting on the pivot point fulcrum we've been teetering on for a couple of weeks now.
As the morning rolled on, before the open, company after company reported earnings, and they all handily beat consensus estimates - some by huge margins.
From a distance, if that's all you saw, you'd be inclined to think, as I did, that the market was headed for a great day.
But that was just the far view...
Closer to the action (which I wasn't always seeing, because I was in transit), as one after another earnings report came out, again before the opening, the futures ticked down, lower and lower.
I didn't catch the open, so let's pretend I still don't know what happened at that moment.
The opening is important because sometimes it sets the tone for the day, especially if the futures are up big and the market opens up strong and rises steadily from there.
Of course, that's not always true, especially these days. But stay with me.
Later in the day, I'm walking past a TV monitor that has CNBC on, and I see the Dow down 116. That's a far view, again.
We ended up rallying towards the end of the day, and the Dow closed down only 68 points.
But again, that was the view from afar.
Sure, I see all that, and take the far view. But, I also take the near view.
Up close, earnings look great, and the U.S. looks like it's "basing" and laying the groundwork for reasonable growth.
All that is tentative, however, when we look closer. Not closer here... closer at Europe.
We are very much dependent on what happens there, because our financial institutions are connected by means of short-term funding mechanisms, capital flows between institutions, and, besides a lot more mechanical interconnectedness, there's the whole "perception" thing.
Banks are nothing more than citadels of trust, exactly the same as our relationship with paper money. There's nothing backing either, other than our perception that they are backed by the full faith and resources of governments, markets, and our own hopes.
Well, let's not even go there.
My point is, if banks in Europe take big hits and some collapse, you better believe the contagion effect will spill over here.
No, Europe is not out of the woods. In fact things there are getting worse, not better.
We are still on that pivot point we talked about last week. And in spite of Europe, we can still go either way.
The important numbers I'm watching and hoping we break above are: 13,300 on the Dow, 1422 on the S&P, and 3130 on the Nasdaq.
On the downside, I'm going to get worried, maybe very worried, if we break below: 12,734 on the Dow, 1343 on the S&P, and 2900 on the Nasdaq Composite.
We're in-between near and far, so we wait. At least, I'm waiting.
Onto other than market stuff...
Your Overwhelming Response
Thank you, thank you. So many of you, an overwhelming number of you, responded to "Subprime Student Slaves."
You wrote to me, posted comments, and spoke up about what's happening to our education and the travesty that's befallen it, courtesy of loan sharks and greedy schools and administrators.
Here's what I'm going to do about it.
I'm working on compiling a lot of what you wrote into a letter (probably a longish one) addressing our collective outrage and suggesting some fixes. I'm going to publish it, and send it to Congress and the President.
For those of you who wrote me, may I add your name (no contact info, or anything like that, just your name as you signed your comments) to the bottom of my letter?
I want to show our solidarity, and there's always strength in numbers.
Please let me know if you don't want me to use your name, and I won't, of course. If you don't mind and don't respond, I will attach your name.