Today's prudentbear.com -->
Market O.D.’s On Blue Pills
Asia was higher last night as Japan and Hong Kong both rose 2
percent. Europe was also a little higher this morning, and the US
futures were off slightly. We opened down and tried to sell off.
When things didn’t collapse, the buyers rushed in and we were
whistling Dixie right into the close where we ended on the high.
Volume was chunky (1.2 bil on the NYSE and 2.3 bil on the
NASDAQ.) Breadth was 2 to 1 positive on both exchanges. Big
winners were in the Internuts as the INX rose 9 percent. Big
losers were hard to find, but MO dragged tobacco down as the
TOB lost 2 percent.
Tech started the day mixed, but by the close we were solidly in
the green. Chart breakouts seemed to get a lot of people excited
in shares like CSCO and SUNW. It’s too bad that their businesses
aren’t breaking out, and the move might be sustainable. Staying
in the area of pretty pictures, the SOX broke above its April high
and rose 7 percent. For the most part, if you were a tech name
and weren’t up 10 percent today, you were a laggard. MSFT
continues to act heavy (since “action” is all that matters right
now) and might be worth keeping an eye on as this rally
culminates in bull euphoria. MSFT breaking 67 to the downside
could be a heads-up that tech is about to turn lower again.
There’s really not a lot to say here about today’s action other than
the fact they there were more buyers than sellers. Financials
traded up today as well. The BKX rose a percent, and the XBD
rose 5 percent. GE jumped a percent. Retailers continued to
show strength as the RLX rose 2 percent. The VIX slumped 4
percent to 23.24. A VIX of 20 often indicates investor
complacency, and we appear to be fast approaching that level.
With the 200 day moving average for the SPX just 22 points away,
I assume we’ll be seeing both it and a VIX of 20 fairly quickly.
Oil rose 7 cents to $29.98, and gasoline futures hit a new high.
Gold traded up almost $12 last night in Asia and then tired to rally
again this morning in NY. But buyers seemed a little exhausted
today after Friday’s romp. Consequently, gold ended down $2
but off the lows. Lease rates continue to be quiet. The HUI traded
higher early on with gold but fell back to negative on the day
before rallying back into the close to end near Friday’s high. The
fact that the gold shares held up so well in the face of weakness
in the metal’s price is quite bullish. It’s not so bullish for the
dollar. The US dollar index rose a touch and continues to hang
around the 116 area. The euro slipped a touch and is still floating
around the 87-cent area. Treasuries were up a tad.
With today’s rally, the 200 day moving average on the S&Ps
seems a foregone conclusion as charts and graphs continue to
direct trading at the moment, and it is the next big chart hugger
level that we have to go. While the market appeared to O.D. on
“blue pills” today, we’ll have to see how far that can take us
before the buzz wears off. I continue to believe that the next big
challenge for the market will be a break in the currency and rising
interest rates. Neither of which is bullish for US financial assets,
but for today it was time to party like it was 1999... |
