I am a bull, and in case you haven’t noticed, I am bullish on both the global economic recovery and the market.  I see a bright, near-term future for the market, and I see an unbelievably brilliant long-term future for the global economic recovery.  In particular, I see a marvelous and prosperous return to health for the U.S. economy.  Much of what I see I will address down the road, but for now, suffice it to say the U.S. economy still has some hurdles, but that does not diminish my bullish sentiment.  In fact, it enhances it, which leads me to the question below.

If you think Q2 earnings are going to catalyze the market forward, how do you explain the lackluster performance of the market yesterday and today?

The market is performing as I think it should and will.  In fact, as a bull, I am fine with this “melt up,” as many have called it. I like incremental movements. Although I like forward movement in the market, a big jump forward is, in some ways, as worrisome as a big jump backward.  Moving forward incrementally allows for dissolution of the shorts and it provides a foundation to consolidate, both of which are helpful to my trading goals.

As well, even if the market is moving higher slowly (an inch at a time), it is moving higher, and moving higher breeds confidence.  Now I just said the word that tells the tale – confidence.  Many retail investor dollars and some institutional dollars are still sitting out this melt up, as those who control those dollars remember the fall of 2008 and many are still not convinced this rally is real.  I understand the reluctance, but the rally is real, and it will stay real for the near term.

Down the road, as we handle the fiscal, monetary, and economic problems still in the pipeline, the markets will respond, but for this time, trading opportunities abound.  So my explanation is simple – whatever the market has not built in going forward, it digests slowly and responds gently.

One more thing … Digest this …

Intel Corp. says its net income in the first quarter nearly quadrupled over last year. Intel’s latest profit was lifted by sales of new chips for computer servers as well as an overall bump in technology spending. And in the comparable period last year, the company took a big charge to write down the value of an investment.

Think technology …

Trade in the day; invest in your life …                                                                          

Trader Ed