By Dave Fry, founder and publisher of
and author of the best-selling book
February 16, 2010
BULLS TAKE CHARGE
Bulls had their moment today although volume was light. Sometimes rallies like this are hard to understand since issues plaguing markets the past two weeks (PIIGS and Chinese tightening for example) haven't been positively resolved. Tuesday's rally catalysts came from a stronger Empire State Mfg report and more M&A activity with Simon Properties offering $10 billion for bankrupt General Growth. Barclays posted (gasp!) better than expected earnings pushing the stock and financial sector higher. Toss in a healthy dash of peer pressure and markets took off higher.
The dollar fell substantially today for no particular reason causing commodity prices to move substantially higher.
Volume has been light on rallies the past six months and much heavier on declines. Tuesday's light volume may have to do with Chinese New Year and traders slow to return from the extended holiday weekend. Breadth was extremely positive.
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A light volume rally is common for this market given the past six months. Perhaps most of this is due to Chinese New Year and folks still away from trading desks following the holiday weekend.
The fall in the dollar Tuesday remains a bit of mystery since most news accounts seemed finding an explanation difficult. The only intelligent observation seems found in a rumor that the Chinese may revalue or allow the yuan to float. Most believe that will attract investors away from the dollar.
Another story not well reported was a
regarding declining purchases of Treasury bonds by overseas investors. This comes with obvious increases in funding requirements for the US Treasury.
We're heading to the homestretch for earnings reports. Nearly 80% of reports are beating estimates so that's a good thing but nearly over. Investors want to see proof that an economic recovery is taking hold.
Wednesday brings us Housing Starts, Building Permits, Industrial Production, Capacity Utilization and Minutes of FOMC meeting.
Let's see what happens and you can follow our pithy comments on
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Dave Fry is founder and publisher of
, Dave's Daily blog and the best-selling book author of
, published by Wiley Finance in 2008. A detailed bio is here: