Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
We are in the midst of yet another V shaped rally and at this point there is no more surprise. It has become the rule…the familiar. This is episode #3 of the second half of 2013; and one can argue this is the most “vertical” of all 3. I do not now show the 5 day moving average on the chart below but the index is as far above it as any time in 2013. The only thing close was 9/18 which was the immediate afternoon sugar high from the “no taper” decision by the Fed.
Ironically these fools in D.C. have created an environment where the Fed won’t….ever….cut back QE. After weeks of shutdown and wrangling all they could do was kick the can til January 2014? So not only won’t the Fed even do a minor tightening now due to the economic impact of the govt shutdown and uncertainty, they also will have the same reasons for the first quarter (or two) of 2014. And whose to say the next kick the can won’t be 6 months or something short enough that simply constantly created the uncertainty that the Fed wants to see recede.
Google provided a massive halo effect for all tech stocks Friday, and completely overwhelmed any bad feelings of the massive $1B revenue miss by IBM earlier in the week. With QE almost permanently on hold and the last major issue of the year (D.C.) now off the table some now are calling for a 1999 melt up in the fourth quarter.
We have a heavy slate of earning reports this week and next – we’ll see if the hear no evil, see no evil but expand the multiple of the market (already up 2.5 this year alone) continues. As for economic data due to the government shutdown some old reports should be resurfacing soon, including September’s employment data which is now set for release Tuesday.
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Any securities mentioned on this page are not held by the author in his personal portfolio. Securities mentioned may or may not be held by the author in the mutual fund he manages, the Paladin Long Short Fund (PALFX). For a list of the aforementioned fund’s holdings at the end of the prior quarter, visit the Paladin Funds website at http://www.paladinfunds.com/index.php/the-fund/holdings
