Even Superman is no market fortune teller. But, with the McClellan Oscillator as low as
we've outlined the past two days; the end of month at hand for portfolio "window
dressing"; and "dip buyers" at the ready, it didn't take much brilliance to
expect this kind of outcome.
We actually put a few small short positions on today and
kept them that way given the likelihood of a day like today. So the GDP data came in better than expected
and the media was shouting from the rooftops the recession is over. Maybe it is, but looking past the headline
number it's apparent the upbeat result was impacted by two "one time" occurrences—"cash
for clunkers" and the first time home buyers tax credit. The former probably won't be repeated and a
repeat for the latter is uncertain.
Nevertheless, the headlines are what counts and up we went
but again, on lighter volume. This
pattern is getting tiresome and you'd think wise pros would find it
disturbing. Breadth was very positive.
And, Dave Hurwitz offers his analysis of just the NYSE below. You'll note we almost had a 90/10 day the other
way but on lower volume than yesterday.
Let's
not give Superman a bad name but even he can't predict the future;
however, we mortals following the readings of the McClellan Oscillator
knew a rally was imminent. Now, what we still don't know is how durable
this rally will be. It sure "feels" like "dip buyers" are in the
driver's seat, but you never know when that pattern will change.
Further, these buyers can push things higher on lighter volume until
they can't.
A string of lousy data this week from lower home sales and
price data; below estimated Durable Goods Orders; and, the killer, much lower
Consumer Confidence all indicate worse conditions ahead. If markets are "forward looking" then
investors can't ignore poor data; but, they did today with "old news" from GDP
data. It seems ephemeral but this has
been a strange market anyway.
Tomorrow we'll post again but look at "monthly" data to get
the longer-term perspective that's always important to do occasionally. We'll also get more data from Personal
Income/Spending, Employment Cost Index, Chicago PMI and more Consumer
Sentiment.
We've been carrying heavy (60-90%) cash positions for the
past few weeks and some positions listed below may seem contradictory; however,
different time period views and levels of aggressiveness dictate this with
different portfolios.
Disclaimer: Among other issues the ETF Digest maintains
positions in: SPY, SPXU, VTI, TYP, FAZ, SMN, SRS, EFA, EFU, EEM, EDZ, UDN, GLD,
EWC, and FXI.
