As QE2 comes to an end last month many trade related to the low U.S. dollar and high-priced commodity environment maybe reversed. We may see a shift from commodity funds to equity-backed ETFs. Perhaps this rebalancing is also helping to lift stock prices this week.
The ISM number this morning set off another mad rush to add equity exposure. I don’t think I recall seeing the DOW up triple digits every single day of the week. This straight up rally offered few opportunities to get on board. Yesterday I felt that the many of the traders online are still cautiously positioned and unfortunately for the bears it’s again the case today. After going straight up for 5 days it’s logical to have a bit of a retrace but given the current sentiment the initial pullback maybe shallow.
We also have the NonFarm Payroll next Friday and could help the bulls if it comes in strong. Have a nice long weekend.
