Central Bank Liquidity Keeps Bulls Happy: Dave's Daily

NEW YORK ( ETF Digest) -- As Marc Faber reported Monday, two separate packages of over $1.3 trillion LTROs (Long-Term Refinancing Operations: dba "bailouts") in the U.S. & Europe are bullish for stocks. Further, rumors remain the Bank of Japan is privately conducting similar operations and no one really knows what the Chinese (PBOC) are doing.

ISM Mfg Data (53.4 vs 53.2 expected & prior at 52.4) indicates continued slow and steady economic expansion. Unfortunately prices paid remains higher at the same time. Construction Spending (-1.1% vs .7% expected & prior -.8%) was lower and some blamed this on the weather which isn't intuitive.

Stocks rallied as the new quarter began on the back of ISM data primarily and secondarily as new funds get reinvested to begin the month and quarter. Tech once again led markets higher with Apple (AAPL) recapturing its momentum after Friday's selling. Perhaps some were thinking and there were some rumors some index rebalancing could occur which would hurt the shares and indexes where it's a heavyweight. The rally was fairly widespread with only homebuilders (ITB) down on weaker Construction Spending. As commodity prices rebounded on ISM data, materials (AA & XLB) strengthened

Oil (USO) prices rallied nearly 2.2% on back of the ISM report. The dollar was slightly weaker and commodity prices (GLD, JJC & DBC) rallied overall. Bond prices rose modestly even as stocks rallied.

Meanwhile in Europe economic conditions continue to deteriorate. Unemployment has climbed to a 15 year high with nearly 17 million out of work. Further there is more bailout and restructuring chatter regarding Spain, Italy and Greece. In China a contraction remains underway which should be bearish for emerging markets but not Monday as prices rose.

Perhaps some late-day selling in equities came after the Royal Bank of Canada was accused in a CFTC lawsuit of a massive and illegal trading scheme.

Insiders continue to sell into strength but the chart below doesn't necessarily breakout the details. Nevertheless, what do insiders know we don't?

Volume was moderate but the heaviest selling came into the close. Breadth per the WSJ was quite positive.

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