Bulls Live in Denial: Dave's Daily

NEW YORK ( ETF Digest) -- What can rally markets off recent lows is this announcement from Bloomberg: "Federal Reserve Chairman Ben Bernanke will speak to an Atlanta Fed conference and after will engage in a brief, moderated Q&A session. Atlanta Fed President Dennis Lockhart will also speak at various times during the conference, as will Boston Fed Pres. Eric Rosengren, in Stone Mountain, Ga." Bernanke et al are stock market tape watchers. No doubt focus groups are giving him some tidbits of QE hope for discouraged bulls. They'll be looking for it in any parsed phrase.

In China inflation data was reported as hot while at the same time authorities wished to ease. This is a contradiction and may not happen as now they'd be trapped. The eurozone is back center stage with reports of their recovery being greatly exaggerated. Spain is on deck and any austerity measures will be greeted with riots. The ECB has already printed nearly $1.3 trillion (about the same as the U.S. Fed) to stimulate and/or bailout their mostly southern neighbors. They may be tapped-out and if not they're just pushing on a string.

Earnings season will begin with Alcoa (AA) leading off once again. Judging by weak base metals prices (DBB & JJC) it's all about the outlook. Earnings growth is estimated at 3.2% growth for quarter one but if you strip-out Apple (AAPL) earnings this is whittled down sharply to 1.8%.

Oil prices (USO) were weaker on what is perceived as declining future demand notwithstanding Iranian issues. Gasoline prices (UGA) got left-wing politicos searching for someone to blame. Washington senator Maria Cantwell wants to pin the blame on ETFs which allow investors (gasp!) to hedge or speculate. She should look in the mirror and then she would know who really is to blame for 30 years of no new refineries being built due to counterproductive regulations. It's react and distract for many politicians looking for scapegoats in the retail sector of all places.

The dollar (UUP) was quite weak but mostly against the yen (FXY). Gold (GLD) rallied given dollar weakness and renewed demand from India. Again, here as well, the Indian government (nanny-state) relaxed duties on the metal. The big winner on the day was U.S. bonds as demand increased on weak economic data and stock prices.

Stocks sold-off early, rallied some off lows, then closed weaker sporting +/-1% losses overall. Volume remained light even as sell-stops were hit and breadth per the WSJ was decidedly negative. Perhaps institutions decided to sit this one out hoping and waiting for a Turnaround Tuesday.

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