Friday, September 24, 2010

Jackie Gleason, CMT

...And away we go!

Jackie Gleason's tag line applies to the mood on Wall Street today. After a breakout and test, the S&P 500 is back in rally mode, at least as of 11am NYT Friday. Why? Not durables goods orders although it was better than expected.

It was Germany, where they breathed a sigh of relief that Europe's backstop was not facing a near-term  growth slowdown. One report on business sentiment unexpectedly rose in September.

This just reinforces the idea that multinational companies here - the ones driving the rally - are doing OK while the rest of the US economy flounders. It is the difference between the stock market and the economy. Domestic unemployment does not matter - for now.

The tanking dollar does not alter that theory. After all, it helps our multinationals export their wares.

So, I should be bullish? The tape is up, that is for sure. But there is something about gold being at record highs with no inflation. And even though bonds may have taken a little hit today, the 2-year yield broke down to record lows this week.

Stocks may seem healthy but other, smarter markets say otherwise.


Paul O'Cuana said...

That's it in a nutshell. Who is right, the S&P 500 or the 2 year note?
I'm going with the bond crowd; they're not as excitable.

William said...

Also... this week's COT showed an unmistakable trend. Large speculators sold the S&P E-mini hard this week, and are now very net short the market. The small speculator or dumb money used this week to get squeezed out of shorts and are now firmly net long the E-mini... That is not the behavior you see at the start or middle of a bull trend...

patrick neid said...

To the moon Alice, to the moon!

Investor's Intelligence at 41 still has some room to the upside. Then trouble.

MrWave4 said...

I like to look at the CME emini futures contract & agree with William the large spec's are in one of the largest Net Short positions which is going against the charts. Are they saying we are close to resistance ?