Dave's Daily By Dave Fry, founder and publisher of ETF Digest and author of the best-selling book Create Your Own ETF Hedge Fund. March 22, 2010 RIPE FOR A TURNAROUND DAY The punchbowl's still in place and that trumps any bad news from any other source including Congress. It turns out Friday's quad-witching was just the mechanical event it often is. Then over the weekend Greek news turned murkier, the dollar rallied (usually not great for stocks), worries about global interest rate hikes, gold and other commodities sold off, and things looked gloomy. US stocks gapped open lower and then, voila! it was time to rally. And what sector led the charge higher? Health Care! Why? Because some pundits like GS argued, "the bill is behind us now" (well, maybe) and "there's 3 1/2 years before we have to worry about anything." Well, that seems to sum up the American attitude--kick the can down the road or in Wall Street parlance, make hay while the sun shines. The squeeze was on and those who could launch buy programs did so at the usual times, early and late. Volume was heavier than recently especially for a Monday. Nevertheless, it was still light but breadth was positive. ' Continue to Major US Markets
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The punchbowl trumps bad news everyday for the past 9 months. The rally has gone parabolic and complacency has taken hold per the VIX. The Summation Index is much overbought and many individual sectors are also overbought. With the punchbowl in effect just about every security on the planet is rising with only some differences in degree. It's the environment we have. The Google story ( Press Release) is a principled business decision. Perhaps it will hurt them or it may backfire on the Chinese. But what good is it for a business to be an accomplice to censorship by dictators. Where does that end if you don't stand-up for yourself. Clearly the Chinese will regard this as a slap in the face deserved of bellicose scorn as in this official response. We'll have to see if they cut off their Hong Kong service. Tomorrow is Home Sales data and the estimates are around 5 million units. The rest of the week looks like this per Briefing.com: Let's see what happens. You can follow our pithy comments on twitter and become a fan of ETF Digest on facebook. Disclaimer: Among other issues the ETF Digest maintains positions in: RSP, VTI, MDY, IWM, XLY, XLI, DVY, IYR, XLF, UUP, EWC and EPI. The charts and comments are only the author's view of market activity and aren't recommendations to buy or sell any security. Market sectors and related ETFs are selected based on his opinion as to their importance in providing the viewer a comprehensive summary of market conditions for the featured period. Chart annotations aren't predictive of any future market action rather they only demonstrate the author's opinion as to a range of possibilities going forward. More detailed information, including actionable alerts, are available to subscribers at www.etfdigest.com .