This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Euro Deal Triggers Bull Stampede: Dave's Daily

Photobucket

The good news is there's a plan. The bad news is we don't really have the details pinned down as noted HERE. More good news is this stock market rally, should it hold Monday, will mark the largest rally in the last quarter century if records make for good news. Make of it what you will but shorts have been squeezed out of whatever positions they maintained. That might in itself be bad news.

The pressure to make a deal was very high. After all, if the banks didn't (and still haven't actually) accepted a "voluntary" restructuring of Greek debt, the an "involuntary" event would mean default. This would in turn trigger CDS (Credit Default Swaps) activity which counter-parties probably could not pay. Contagion would burn through the financial system creating chaos. This is why the FT article from above is so interesting and worrisome.

Where will the firepower come from to push stock markets higher given the high rate of equity fund redemptions over the past three years? The last I checked equity mutual fund cash balances were only 3.4%). No, juice for bulls will come from private investors with managed funds switching from bonds to stocks. The other source for buying is from the usual suspects--hedge funds, trading desks and HFTs.

Bonds did sell-off as switching to equities and more risk was apparent. On the other hand, commodities rallied as authorities have chosen inflation (no surprise here) over deflation. It's easier to do politically if you don't care about succeeding generations. Gold, silver, base metals, energy and most commodities rose sharply as a result. You want to pay more for stuff don't you? That's the trade-off when pursuing Keynesian policies and big government.

Economic data Thursday was shrugged-off as the two problem areas Jobless Claims (still over 400K) and Pending Home Sales (-4.6% vs unchanged expected) continued to struggle. GDP data was reported at 2.5% growth matching expectations and vs 1.3% previous. Most of the growth there was from consumer spending the bulk of which was in the computer category (iGadgets?).

Meanwhile, Bloomberg's Personal Consumer Consumption vs Confidence clearly displays the disconnect between the two:

Earnings reports, if any mattered vs the news, were good overall led by Exxon Mobil (XOM), Aflac (AFL), Akami Technologies (AKAM) and Aetna (AET) to name a few. The biggest winners on the day had been the worst performing sector previously--financials. There bank stock prices were higher across the board.   

The stock market is at least short-term overbought as the trusty daily McClellan Oscillator ($NYMO) reveals at the end of this posting. Remember this was the case on Monday and then we had Tuesday's massive sell-off, remember??

Volume was high on this epic rally while breadth per the WSJ probably was a 90/10 day.

You can follow our pithy comments on twitter and join the conversation with me on facebook.

Continue to U.S. Sector, Stocks & Bond ETFs

1 of 5

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,279.74 +13.75 0.08%
S&P 500 2,010.40 -0.96 -0.05%
NASDAQ 4,579.7890 -13.6380 -0.30%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs