Tuesday, May 28, 2013

Stocks Finish Higher as Volume Jumps above Average

Tuesday’s continues to be the day to be long stocks. The Dow is now 20 for 20 since January. This morning’s economic reports pushed stocks higher as the Case-Shiller index and Consumer Confidence indicators beat expectations. An intraday selloff tainted the day’s initial gains, but the market was able to close off its lows of the day. At this point, this market still wants to push higher and last week’s low is a key level to hold. Volume was above average on the NASDAQ as traders and institutions alike were active in the market. This uptrend remains intact and will take a bit more to knock this market off its feet. After last Wednesday’s reversal we have seen the market find support at lows. Thursday and Friday of last week are great examples of the support this market has. Sure, the Federal Reserve’s QE and ZIRP have propped up the market and we’ll ride this wave higher. One issue that could derail the Fed’s policy is a big jump in interest rates. JGB’s have more than tripled in a month, could you imagine if the US Treasury 10 year note triple in yield? Within a month the 10 year Treasury note has increased in yield by 50 basis points! Keep an eye on yields as bonds continue to sell off. You can track using TLT. No one knows when this uptrend will end, but plenty will certainly try to pick the top. Sentiment will be interesting to see how it has changed since last Wednesday’s market action. Will we see more euphoria among market participants? On a fundamental note here is a great chart from ZeroHedge: From ZeroHedge Ask yourself this question: Does it matter if you know how much organic growth has contributed to overall EPS growth? At some point when we go under a significant correction it will be important. What is important is how we react to price action and position ourselves to take advantage of a trend. It is a great talking point for a cocktail party, but it isn’t something you can take action on. A decent start to the week and we’ll continue to look for this market to push higher.

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