HEADLINE WRITERS EXTOL DOW 13,000
Headline writers are busy spinning the Dow breaking above 13,000. It's a neat headline but as Ace Greenberg was fond of saying: "It's just a number." But this is the number Main Street and the media follow and obsess over most. The more cynical expression has always been; "The Dow is just window dressing for the tourists." After all the index is just 30 "price weighted" large companies whereas the S&P 500 gives you a better overall picture of market strength.
Economic data wasn't great but bulls managed to cherry-pick the news they liked and ran with it most of the day. Durable Goods sank (-4% vs -.7% expected and prior 3.2%); Case-Shiller Home Price Index (-.5% vs -.4% expected and prior -.7% previous); GS Weekly Store Sales (-1.0% vs previous 3.00%) and lastly, Consumer Confidence (70.8 vs 64 expected and previous 61.1) was what bulls grasped. The latter took the Retail ETF (XRT) much higher and now the sector is trading at 20 X earnings or a 40% premium to the overall market. I don't know about you, but earnings from the sector have been quite mixed.
Oil prices (USO, USL) fell again with losses now at 3% over the past two trading sessions. Traders attributed the decline to the lower Durable Goods and home price reports. Gold, silver and copper prices were sharply higher in trading as the dollar index continued to drop. (Doesn't it bug you when government spokesmen insist they want a "strong dollar"?) Don't kid yourselves, precious metals and some commodities are rising due to Fed and global central bank monetary policies. Despite the fall in oil, most commodity tracking ETFs (DJP) performed well overall. Meanwhile bonds were mostly flat.
Pimco's Bill Gross wants to play defense since eventually the printers ink and paper will run out according
to this report
. Who can really disagree with his logic? I can't. Our technical systems along with many other credible ones I've seen say: "Get Out!" But most reliable indicators have never met a Fed printing press like this. All this liquidity can steamroll most indicators. So, while they say "get out" the global central banks holler, "get out of the way!"
Another bullish encouragement is the ECB will inject nearly ¿500 billion this coming week in their LTRO (Long Term Refinancing Operation--aka "bailout") facility. Once again this is money from on high for trading which is short-term bullish.
Tech still leads the stock market with Apple (AAPL) indicating the upcoming launch of iPad 3 which might do everything including cooking dinner for you.
Volume was once again ultra-light and breadth per the WSJ was still mixed overall.
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