The Stock Indexes continue to baffle the bears, as we climb the wall of worry.
After we “survived” October which was touted by the cable news reporters as “the most important earnings season in the history of history of history”, I felt at that time, we would have this type of action in the Stock Indexes. Fresh New Highs are pounded on by the bears, but as the market sloughs off continuing high unemployment. With today’s 2-1/2 year high in existing home sales, that languishing housing market looks like a swimmer who sank to the bottom of the deep end of the pool, has touched it toes on the bottom and is now pushing off to gasp for air above the surface. Just maybe, if consumer sentiment comes back due to this, in six months or a year we may look back at today’s activity as a critical turning point.
Politically, as well, it looks as if there will be pressure, rightly or wrongly, for a new treasury secretary. Such a public “house cleaning” might be just the theater the public needs to see to feel that that crisis might be put to bed for the nation’s psyche.
I am not sure, and it really doesn’t matter what I think or any other ‘analyst’ professes on his 20 seconds of air time. The charts don’t lie, and we have had the mother of all rallies since last March. Like looking at a patients EKG, with a room full of doctors standing around arguing as to why the patient is doing better.
It really does not matter.
If the market is, as it is purported to be, a forward looking indicator, then perhaps we have turned the corner.
That’s not to say we might not have a frightening pull back or ‘correction’ of 10 or even 20 percent. After such a rally as this, we are overdue. But a correction at this point would be healthy.
We need more bears out there talking about “the next shoe to drop” and you can fill in the blank as to what that might be. There are plenty of eligible candidates for that spot. Will it be worries over 1) Inflation 2) Interest Rates 3) Price of crude Oil 3) housing market hic ups on the way to a real recovery 4) the devaluation of the US Dollar 5) Commercial real estate default rates. One could go on and on, and believe me, we need to hear about all those things. That’s the only way this market will continue to look to the future, while the rest of us look to the past or the very immediate present.
The time to worry about another severe economic melt-down, will be when we stop hearing about the negatives. When they bring back the TV shows about flipping houses, or if they start a new series of shows about some other bubble, that’s when its time to look for a path to a safe exit.
Anyhow, its just my opinion anyhow. With a grain of salt. Its a holiday week, and generally we have a flurry of business early, followed by the sounds of doors closing and engines starting as people head for home.
Good Trading
