Investors must be looking ahead to good employment reports to bid markets higher. Further, let's face it, it's the end of the quarter and there's some window dressing in place. Monday's volume was pathetic and Tuesday wasn't much better. The "bad news is good and good news is better" theme remains dominant. With the former, interest rates will stay low when the news is poor such as with today's crummy Consumer Sentiment report which was described by some bulls as not being "worse than feared". But, even if so, bulls like the poor news since the theme remains in place.
Other than Consumer Sentiment there was little news other than Home Depot will buy back some outstanding shares.
Commodity prices like bad news as well since their rise means continued easy money policies.
The most meaningful information comes from our own Federal Reserve in St Louis. The chart below shows the massive amount of liquidity, $500 billion since the beginning of 2011, the Fed has added to the system.
This is probably all you need to know why stocks overall are rising.
Volume remains quite low which has been this rallies signature since Labor Day--low volume rallies, high volume sell-offs. Breadth per the WSJ was quite positive.
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is a market breadth indicator that is based on the difference between the number of advancing and declining issues on the NYSE. When readings are +60/-60 markets are extended short-term.
McClellan Summation Index
is a long-term version of the McClellan Oscillator. It is a market breadth indicator, and interpretation is similar to that of the McClellan Oscillator, except that it is more suited to major trends. I believe readings of +1000/-1000 reveal markets as much extended.
is a widely used measure of market risk and is often referred to as the "investor fear gauge". Our own interpretation is highlighted in the chart above. The VIX measures the level of put option activity over a 30-day period. Greater buying of put options (protection) causes the index to rise.
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Yes, we're seeing some window dressing and tape painting on light volume. It's pretty transparent.
There's only one thing you need focus on, the above chart showing the $500 billion injected into the system since January 2011. That's the story in a nutshell. A more money than brains market.
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