Despite Little Good News, Market Rallies for Second Straight Day

       There are some theories:

       "There are two possible explanations to the market’s advance over the past few sessions," explained Michael Sheldon, chief market strategist at RDM Financial Group. "First, there were more negative earnings pre-announcements this quarter. Historically, when this happens, market tends to rally once companies actually report numbers with some beating the lowered estimates.”

      “And secondly, a certain number of investors are looking ahead to the growing likelihood that the Fed will step in once again and provide stimulus to the markets.”

      http://www.cnbc.com/id/48240949

       So either earnings expectations are so low that it's easy to beat or the Fed is going to bail them out with more QE. What about the idea that maybe the market-as the forward indicator it's supposed to be; Sumner's "long and variable leads"-sees things aren't as bad as believed? The Fed yesterday said it sees no double dip.

      The news today was mostly bad. Unemployment claims were back up as last weeks low number indeed was merely seasonal. At 386,000 the number is consistent with a mild recovery.

     "On the economic front, jobless claims jumped 34,000 last week to a seasonally adjusted 386,000, according to the Labor Department. Economists surveyed by Reuters had forecast claims rising to 365,000. The four-week moving average for new claims fell 1,500 to 375,500."

      "Existing home sales fell 5.4 percent in June to an annual rate of 4.37 million units. But the median sales price was higher than a year ago, rising to $189,400 in June, up almost 8 percent from a year earlier."

      "Economic activity decline more than expected in June, according to the Conference Board's Leading Economic Index, dropping 0.3 percent to 95.6 after gaining 0.4 percent in the prior month. "

      "And adding to woes, factory activity in the mid-Atlantic region contracted for the third-straight month, according to the Philadelphia Fed Reserve Bank's business activity index."

      "Among earnings, Morgan Stanley [MS 13.35 -0.64 (-4.57%) ] tumbled after the financial giant missed earnings expectations, hurt by a sharp decline in its trading-related businesses. The results come as a surprise to analysts who had also expected the company to beat following better-than-expected earnings news from rivals JPMorgan, Goldman Sachs, Citigroup and BofA in the last week."

       Bank of America was down again now to about $7.43. Which to me screams buying opportunity. All we need now is to buy up some August $8 calls right? If it can just go back to where it was two days ago we're in the soup. LOL.

       It does seem to be that the theme of earnings so far, even in those companies that beat, is revenue has been light. Which obviously does not raise confidence for the future.