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Bad News Bulls: Dave's Daily



There's nothing like bad news to get bulls fired up. Clearly, there's a large crowd which ascribes to the previous theme: "bad news is good, good news is better". This has dogged bears and encouraged bulls since late summer 2010 as QE2 began and zero interest rates remained entrenched. This encourages risk taking given poor alternatives. Wednesday, the hint of more QE post June 30 th contributed to a short-lived intraday bounce. Thursday featured more dreadful economic news with Jobless Claims once again higher and GDP data confirming weak growth. As to the latter, the WSJ noted the report featured more inventory versus consumer spending--this is a bad sign.

So what perked up the bulls today? Microsoft (MSFT) did as hedge fund operator David Einhorn pushes that CEO Steve Ballmer needs to go. So MSFT being a large weight in the NASDAQ and QQQ (NASDAQ 100 ETF) lifted tech Thursday. Also, per many reports, MSFT is a large hedge fund holding so Einhorn has plenty of supporters.

Not much else was going on as investors focused more on a few other winners with good earnings from NTAP (Network Appliance). Another retailer SYMS (Syms Corp. also the owner of Filene's Basement) said it wanted to "enhance shareholder value" and possibly sell the company.

It didn't hurt stocks that POMO totals for the last week of trading now exceed $30 billion with another round Thursday. That's a significant amount for the Primary Dealers to trade.    

Ten-year U.S. bonds rallied to levels where yields are negative if you ascribe to headline inflation data. So why not cash then? Commodity markets closed mostly flat while the dollar was slightly weaker.

Volume continues along its weak path and will become even lighter before the Memorial Day holiday Friday. Breadth per the WSJ was positive.

 

 

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