We will definitely face more of the same this week as we have the past week.  There seems to be some progress between the President and Congress, but it’s anybody’s guess what combination of increased revenue and reduced expenses will survive political battle.  It will probably be some combination of increased taxes on the top 2% of our wealthiest citizens and some reduction in medical spending.  Who knows what else?  More on that later.

Today was an inauspicious start to December.  Based on positive pre-opening behavior from Europe, including a number of positive PMI’s (purchasing manager indices), as well as a positive November PMI of 52.8 from our own economy (up from 51.0 in October), our domestic markets opened up about 0.5%.

The S&P 500 held once again at the 1350 level, and a “Rush to Risk” ended the shortened week at 1409, up more than 3% for nearly all indices and sectors. Where do we go now?

The market surprised us this morning with a strong performance. It could be supported by confidence in Housing, as existing sales were better-than-expected and downright positive (stay tuned for more numbers from housing sector tomorrow). Or it could be a technical move off of support at 1343 for S&P 500, which would be nice if the market recognized at healthy 10% sell-off and is now moving forward.

Lately we’ve been able to reduce the one thing the market does not want: uncertainty. With all due respect President Obama and Governor Romney, “the devil you know is better than the devil you don’t know.” Check off one big uncertainty. 

Third quarter earnings can be just about checked off.  Not quite as good as the first two quarters, especially on the revenue side, but definitely better than most expected. 

The market remains sensitive to weak forward outlooks and continues to punish those stocks that miss on revenues and beat on earnings. Today, ESRX, Z, and BSFT bore the brunt of that attitude, down -14%, -21%, and -11% respectively after-hours.

But not all is morose. EOG and CVI delivered great earnings reports and raised their forward outlooks, and the market responded positively, though not in as dramatic a fashion as the disappointers.

This could prove to be one the most interesting market weeks of the year, assuming the market ever opens.  Talk about uncertainty!  We can add “Frankenstorm” to the litany of other uncertainties such as the election and its impact on a functional Congress and the ongoing concerns in Europe, Middle East, China, and Japan.

This could prove to be one the most interesting market weeks of the year, assuming the market ever opens.  Talk about uncertainty!  Add Frankenstorm to the litany of other uncertainties such as the election and its impact on a functional Congress, Europe, Middle East, China, and Japan.

That’s been hard to figure lately.  Uncertainty has not eased.  Not in Europe.  Not in the Middle East. Not in China or Japan. Not in the U.S., with a dead-heat election battle and unknown future Congressional dynamics.  Companies overall continue to beat earnings, mostly, and miss on revenues.  Now there is a certainty: earnings cannot keep going up if revenues keep going down.

The coming week should reduce uncertainty, at least slightly, since we get a bevy of new economic data and 15% of the S&P 500 reports.  And maybe Spain will decide whether or not it needs help.  Furthermore, we will have the next-to-last Presidential debate tomorrow night.