Oil didn’t go down. Bank stocks in Greece didn’t crash. The dollar didn’t make a new high. And rates didn’t put in a new low. As a result, traders and their computers in the U.S. had the green light to hit the buy button for much of the day on Thursday.

Yep, that’s what this choppy, back-and-forth market has come to. If the key drivers are up, stocks move up. And if not, well, the algos chase their tails to the downside until the closing bell rings.

If you are able to trade the stock market on a millisecond basis, as the big banks such as Goldman, Morgan Stanley, JPMorgan, etc. and hedge funds such as Citadel do, then this is what the stock market game is all about. However, if your time frame extends beyond lunch, the game is a bit more complicated at the present time.

For investors – you know, the folks that own positions for periods measured in weeks, months, or years instead of milliseconds – their view on the stock market’s fundamentals tends to play an important role in their decision making. As such, the outlook for the economy, earnings, inflation, and interest rates tends to be the primary focus of this crowd.

Up until December, the outlook for most of the market fundamentals was pretty rosy. The economy was kicking into high gear, earnings were at record highs, inflation was nowhere to be found (which for the majority of my 35 year career has been a good thing), and rates were likely to stay low from an historical perspective. Therefore, the rebound from the September/October pullback pushed the S&P 500 to new all-time highs. And frankly, this made sense.

Muddy Waters

However, since the beginning of December the market’s waters have been muddied as the economic data has come in on the punk side more often than not, the oil crash looks like it may be starting to have an impact, and folks in high places are becoming very worried about inflation – err, the lack thereof.

The question at this time is if any of the worries are real. And one of the best ways to confirm or deny such concerns is to listen to the message from companies when they issue their earnings reports. And the bottom line is that based on the most recent reports, some pretty big names are starting to fret about the impact from crude’s rude move, the dollar’s strength, and a slowdown in global growth.

What Companies Are Saying Now

Let’s go to the video tape and see what some of the big industrial names are saying about the issues of oil, the dollar, and global growth…

Read the rest of the report…


David Moenning

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David Moenning is Mr. Moenning is President of Heritage Capital Research, a privately owned, investment research firm. Heritage focuses on active risk management and an “own the best and ignore the rest” equity selection strategy.

For up to the minute updates on the market’s driving forces, Follow Me on Twitter: @StateDave (Twitter is the new Ticker Tape)

Positions in stocks mentioned: none

The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management (HCM) and may not actually come to pass. Mr. Moenning’s opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security or Heritage Capital program. No part of this material is intended as an investment recommendation. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any of HCM’s programs. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that investment objectives outlined will actually come to pass. Investors should consult an Investment Professional before investing in any investment program. Neither Mr. Moenning or Heritage Capital Management nor any of their employees shall have any liability for any loss sustained by anyone who has relied on the information contained herein. Mr. Moenning and employees of HCM may at times have positions in the securities referred to and may make purchases or sales of these securities while this publication is in circulation. The analysis contained is based on both technical and fundamental research. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.