Infrastructure Boom Rolls On

I don't know if readers caught my comments last week about the market's reaction after the Fed's prior two meetings. I said that the market rose significantly the day after in both cases, and that perhaps the third time would also be a charm after the May meeting. That didn't happen, as the market did the exact opposite, plunging 147 points. However, on Friday it rallied back up 111 points.

That type of action shows us that there are two important psychological battles going on in the current market. The first is that many traders are underinvested and buying into the momentum of the market, but their fingers are on the sell button at the first sign of any weakness.

The second battle is that there is no follow-through on any correction in the market, and it quickly regains any losses and continues to move higher. This is the classic action of a strong trending market that continues to climb a wall of worry.

One of those worries is that there's a recession right around the corner because of the high price of both oil and commodities and the plunge in housing prices. Many investors get caught up in these types of theories, keeping them out of strong markets because of a possible monster looming in the darkness. That is why I am constantly reminding my readers to ignore the market opinions and pay strict attention to what the market itself is saying.

I am not saying that there are no risks out there, that we are never going into a recession or that these concerns could not become real. However, when I look at what the market is saying right now, that theory just doesn't hold any water.

Right now we have a huge infrastructure boom going on, and although many of the charts are quite extended, it doesn't look like this trend is going to end anytime soon. Stocks in these sectors are benefiting from tremendous earnings growth, an abundance of orders and expanding earnings expectations.

If you look at infrastructure companies such as BHP Billiton (BHP - commentary - Cramer's Take), Posco (PKX - commentary - Cramer's Take), Fluor (FLR - commentary - Cramer's Take), etc., all of them are close to or at all-time highs. That is not something you would see if a recession were close at hand.

They say a picture is worth a thousand words, and the following pictures provide all of the information investors need to know about the world and U.S. economies. There is no reason for me to comment on each chart, because all of information is within the picture.

Source: TC2000

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Source: TC2000

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Source: TC2000

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Source: TC2000

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Source: TC2000

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Source: TC2000

You can see that most of the prices in each chart are quite extended from their 50-day moving averages. A correction back to those areas would probably be quite positive. If and when you start to see stocks in the sector start to break down through their important averages and support levels on heavy volume, then you can then start to worry. Until then, let the market be your guide.

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At time of publication, Manning had no positions in the stocks mentioned, although holdings can change at any time.

Mark Manning, AAMS, is an Accredited Asset Management Specialist and Registered Investment Advisor with Butler, Wick & Co., where he specializes in wealth management. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Manning appreciates your feedback; click here to send him an email.