Market Observations 02/27/06
Supposed inflation "fearing" investors are piling back into homebuilders HGX and the Philly Bank Index BKX, which is at an all time high. Even with the recent pullback in bonds, demand is still at unheard of levels.
Gold, oil & overall commodities are pulling back of late. Wouldn't inflation and higher interest rates drive up gold & commodity prices while hurting homebuilders, banks and existing bond values?
It would seem that the markets are telling us two things loud and clear, WE DON'T BELIEVE IN INFLATION and WE DON'T BELIEVE THAT BENNY & THE FEDS WILL KEEP RAISING RATES.
Today's updraft sent the DJTA, RUT & NYSE to an all time high, the MID a hair short & SP500 to a high not seen since May 01. With near term resistance just overhead, IF the NDX is going up, we are watching resistance at 1717, 1725 & 1760 NDX closely.
An overall market break out to the upside on higher volume with conviction would lead us to look towards 1335 SP500, 770 RUT & perhaps 1790 NDX as possible climax points.
Bare in mind that the NDX does not have to go along for the ride up, as it may have already climaxed at 1761 on 01/11. Since then NDX could be giving us a preview of where everyone will be going shortly. No pun intended.
The NDX might be in a 2 up started 02/10, which could give way to a wicked 3 down when we hit an overall market inflection point. There are 9 trading days until March 10th, anything is possible and nothing would surprise me between now and then.
I would love to see a climax run up to new peaks by 03/10, it would make puts and VIX calls cheaper and the fall that much bigger. Individual investors are flocking to domestic and emerging markets in numbers reminiscent of the days of yore.
And as is usually the case, when the herd shows up, the party is just about over. Remember, just when you think its safe to go back in the water, you can't even make it past the sand.
Gold, oil & overall commodities are pulling back of late. Wouldn't inflation and higher interest rates drive up gold & commodity prices while hurting homebuilders, banks and existing bond values?
It would seem that the markets are telling us two things loud and clear, WE DON'T BELIEVE IN INFLATION and WE DON'T BELIEVE THAT BENNY & THE FEDS WILL KEEP RAISING RATES.
Today's updraft sent the DJTA, RUT & NYSE to an all time high, the MID a hair short & SP500 to a high not seen since May 01. With near term resistance just overhead, IF the NDX is going up, we are watching resistance at 1717, 1725 & 1760 NDX closely.
An overall market break out to the upside on higher volume with conviction would lead us to look towards 1335 SP500, 770 RUT & perhaps 1790 NDX as possible climax points.
Bare in mind that the NDX does not have to go along for the ride up, as it may have already climaxed at 1761 on 01/11. Since then NDX could be giving us a preview of where everyone will be going shortly. No pun intended.
The NDX might be in a 2 up started 02/10, which could give way to a wicked 3 down when we hit an overall market inflection point. There are 9 trading days until March 10th, anything is possible and nothing would surprise me between now and then.
I would love to see a climax run up to new peaks by 03/10, it would make puts and VIX calls cheaper and the fall that much bigger. Individual investors are flocking to domestic and emerging markets in numbers reminiscent of the days of yore.
And as is usually the case, when the herd shows up, the party is just about over. Remember, just when you think its safe to go back in the water, you can't even make it past the sand.
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