Now that was a rally!
The dollar fell back off 73.5 for the 12th time in May and I guess twelfth time's a charm as the market took off and never looked back. We had the better than expected retail sales and the expected downgrade of MBI and ABK, which they, and the finanicals managed to shake off at the day's end. Oil flew back up to $127.79, the biggest one-day gain ever, and no one seemed to care and we can pretty much guarantee a retest of $130, perhaps $135 again.
On the whole, I'd say this is a celebration that the stimulus checks are working but I wonder what happens in July, when all the money is spent on the holiday party (BUD should do well) and the first heating bill of the summer comes in the mail. I know my local utility, PSE&G, just sent us a notice that they've been approved for a 20% rate hike – not the kind of news that makes a person run out and buy an SUV really…
There was obviously a LOT of short covering so it's important to see what kind of follow-through we get but, on the whole, it was a great day and we are close to erasing the whole week's worth of losses. I don't want to be a downer but it all seemed a little too easy for me and I called for covers into the close so hopefully everyone is prepared just in case things don't all come up roses tomorrow with the 8:30 jobs reports, which could reverse this whole thing as anything negative after the ADP report will not be taken well.
Looking back at the Big Chart, we've certainly made some nice gains but still need to punch us through some critical levels:
|
|
|
Week’s |
25% |
20% |
Feeling |
200 |
|
Index |
Current |
Move |
Terror |
Horror |
Better |
DMA |
| Dow | 12,604 | -42 | 10,644 | 11,354 | 11,808 | 12,974 |
| Transports | 2,729 | 19 | 2,336 | 2,491 | 2,591 | 2,713 |
| S&P | 1,404 | 6 | 1,182 | 1,261 | 1,311 | 1,424 |
| NYSE | 9,408 | 37 | 7,790 | 8,310 | 8,642 | 9,456 |
| Nasdaq | 2,549 | 41 | 2,146 | 2,289 | 2,380 | 2,513 |
| SOX | 417 | 11 | 419 | 447 | 465 | 411 |
| Russell | 763 | 18 | 642 | 684 | 712 | 746 |
| Hang Seng | 25,255 | 872 | 24,000 | 25,600 | 26,624 | 25,577 |
| Nikkei | 14,341 | 217 | 13,725 | 14,640 | 15,226 | 14,736 |
| BSE (India) | 15,769 | -547 | 15,900 | 16,960 | 17,638 | 17,594 |
| DAX | 6,941 | -114 | 6,088 | 6,494 | 6,753 | 7,309 |
| CAC 40 | 4,907 | -68 | 4,626 | 4,934 | 5,132 | 5,248 |
| FTSE | 5,995 | -57 | 5,066 | 5,403 | 5,619 | 6,168 |
On the surface, it looks great. We've gained a little ground everywhere but the Dow and the Transports, Nasdaq, SOX and Russell all put up new green boxes as the punched through their 200 dmas. With the Dow having such a long way to go before it's 200 DMA, the DIA index calls might make a nice bet but let's see if the NYSE can make their critical strike at 9,456 and, of course, we'll be watching the S&P to take out 1,424 to confirm that this rally is real.
As we were led up by commodities yesteray, I have the same problem I had last week when I warned to cover and said the rally would reverse so it's with a very skeptical eye that I head into the jobs report but, if we confirm the ADP numbers tomorrow, then there is little reason for the markets to be down at these levels and it may finally be time to roll out a more aggressive chart!
