We are a day away from “sell in May and come back some early November day.” The flip of the monthly calendar will also be marked with May Day “celebrations” across the globe. Thousands are expected to take the streets and protest for more debt and spending from already broke governments.
The obese balance sheets have the rating agencies downgrading countries and their banks. Investors are demanding higher interest rates in Italy, Spain and Portugal as it becomes obvious that each will have difficulties repaying creditors.
At home, while the two parties pay lip service to getting the financial house in order, we continue to run $1.3 trillion deficits and are six months away from running out of monopoly money and will need to raise the debt ceiling at the height of the presidential election.
All the while, 2.2% GDP growth is the best all the debt can muster? Sorry folks, give this author $14 trillion to spend in four years, and we would be doing much better than that. Clearly, last Friday’s GDP report was a big disappointment. Now, the everything is O.K. cheerleaders will point to the consumer and government spending sides of the equation and say consumers are strong, and the lack of government spending is the culprit for the miss.
Surely, consumer spending is a good thing, provided the job market is growing. However, last month’s employment situation report and the last month of jobless claims have doused that theory with water. On Friday, the job numbers for April will get another chance to get it right, but Goldman Sachs says not to count on it.
Oh, back to GDP. While it is true that reduces local and state spending was a drag on GDP, rising inventories boosted GDP by roughly the same amount. Inventories rise for one of two chief reasons.
- Companies want to meet rising demand
- Companies have overestimated demand
If the cause of swelling inventories is answer A, then the economy and stocks should be headed for some fun and cheer. If not, we got problems.
Stay tuned as Top Equity News is constantly monitoring the situation in the markets. For now, TEN is watching to see if the NASDAQ, Dow and S&P can manage to make new 52-week highs. We are in no man’s land right now on the charts. Stocks are in between a series of lower lows and lower highs and February’s rally market highs.
The answer to what is next is simple. If ALL three indexes make new highs, the bulls will be in charge. If ALL three close below April’s lows, then sell in May and come back some other day might just be right on that day.
Stock Market Trends: Is Tomorrow the Day to Sell and Go Away? is an article from: 
