Thursday, June 14, 2012

Rumors of Central Banks Moving to Provide Liquidity Help Lift Stocks

Good news for consumers as CPI dropped, but a worse than expected jobless claims figures continues to show the weakness in the job market. The big story of the day was rumors of a joint strike by central bankers to provide liquidity to the market. Money printing operations has already pumped over $6 trillion into the market and we continue to see the need for more. Stocks did get a big boost, but failed to retake Wednesday’s high. Volume jumped on the NYSE and NASDAQ, but it continues to be very light and below average. Not too many institutions were out buying the rumor over further easing. The market continues to search for direction on day 9 of this attempted rally. Tomorrow we get quadruple witching Friday and you can bet volume will be explosive during the early going. The market will certainly be adjusting to where traders want to be positioned for the Greek elections on Father’s day. A secret “poll” was released in Greece sending Greek stocks higher ahead of this weekend’s elections, but does it even matter? Given the Spailout the Greek’s will want similar terms and then what? Can Italy borrow even more at 7% while only collecting 3%? Is piling more debt on top of debt going to work this time? This is precisely why following price and not guessing where the market will be is much more efficient way of producing superior gains from the market. Sentiment this week tipped the scales back to neutral with bears falling to 36% while bulls jumped to 34%. Neutral market participants continue to be the main driving force of sentiment. Respondents are simply not willing to step in either direction, something we haven’t seen from the market in a long time. The next major move will certainly be powerful with the number of neutral market participants remain very elevated. Happy Father’s day to those dads out there who do their job! Get out and enjoy the weekend and life!

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