Tuesday 2 April 2013

ISM manufacturing a disappointment, but DOW is not dented!

Dear Friends,

It is always important to watch out for ISM data, especially since we are in a very bullish run. This data will tell on whether the companies are doing well. Yesterday, the data shows that ISM is so much less than expectations, 51.3 vs the forecast of 54.2, a magnificent 3 points off the target.

Normally, the stock market would crash on this results. But amazingly, the DOW is off by a small 15 points at 2.15am in the morning. It goes to show that the market is still in a bullish party mode.

But do take note of this off mark, because it might give an indication in the days to come that enterprise might slow down going into the summer period, a period whereby enterprises NORMALLY cut down on production. That is why the cliche "SELL in MAY and go AWAY" comes about. This is a seasonal effect of stock market. Because of worse than expectations from the earnings announcement and the enterprise data.

Do not take this ISM report for granted! It may signify a sluggishness in the market soon, though the INDEX is still in some distance away from a panic selling mode.

It will be wise to take note of this Friday's non farm payroll data and the coming earnings announcement of the US Stocks starting 8th April!


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