Yes, it’s all quite maddening for many rational investors as bad news morphs to become great news.
Yet this has been going on for nearly 7 years as bulls don’t care about anything beyond keeping interest rates at zero for as long as possible.
Thursday we noted Goldman Sachs had indicated a rally would need two things; first better earnings than expected but second more stock buybacks. The latter is what matters for bulls since buybacks financed by cheap credit (ZIRP) is the fuel that provides corporate chieftains to do it. Earnings look much better on fewer shares. Sure they don’t reinvest in the company’s long term growth by doing this, but shareholders benefit in the short-term. Further, corporate insiders have lucrative stock options to enrich them. This goes directly to the http://www.radiosirokibrijeg.com/overnight-viagra “income inequality” refrain we hear so much about.
Friday the Employment Report laid an egg. Only 142K new jobs created vs 203K exp & prior amazingly declined from 173K to only 136K. (Most new jobs were waiters, bartenders and www.amuamu.eu part timers). The joke that's the unemployment rate only 5.1%. All those not working for whatever reason aren't counted anymore.
The Fed chimed-in lamely to assert there are many who just don’t want to work. Why would that be? Maybe it’s easier to coast along enjoying other government benefits. To complete the bad news were Factory Orders which also sucked & blowed down -1.7% vs prior 0.02%. So much for that “solid” economic growth Janet.
With the early bad news stocks dropped sharply but the bad news bulls quickly jumped in for the “stick save” believing the previous 7 years of permanent “dip buying” was still intact. The Dow for example rose 200 points off the just try! intraday low of more than 200 point early drop.
Emerging Markets also rallied on the belief no interest rate increases are in the offing as did Europe and other overseas markets. It also shouldn’t surprise that long-term bond prices also rose as yields fell.
For us, we’ll just keep following what the tape tells us what to do by staying disciplined and systematic.
Market sectors moving higher included: Everything.
Market sectors moving lower included: Volatility (VIX).
The top ETF daily market movers by percentage change in volume whether rising or falling is available daily.
Volume was heavy given the “bad news is good” theme as investors jumped in with both hands to close the week positively. Breadth per the WSJ was 90/10 positive overall.
As usual, the tape action is doing all the talking. Clearly Friday’s rally was impressive in breadth and scope coming off bearish lows. It almost is similar to the reaction when the Fed cut interest rates in 1982 launching the great bull market that ensued.
Goldman Sachs was probably correct in asserting a more durable rally could follow if stock buybacks can continue given low interest rates and earnings improve starting next week.
I’m no fan obviously, but I’ll still follow the dictates of the tape.
Let’s see what happens.
Dave Fry is founder and publisher of ETF Digest and has been covering U.S. and global ETFs since 2001. He is listed as one of 22 experts you need to follow on Twitter. ETF Digest was named one of the most informative ETF websites in the 10th Annual Global ETF Awards.
Disclaimer: The charts and comments are only the viagra uk chemist non prescription author's view of market activity and aren't recommendations to buy or sell only any security. Market sectors and related ETF's are selected based on his opinion as to their importance in providing the viewer a comprehensive summary of market conditions for the featured period. Chart annotation's aren't predictive of any future market action rather they only demonstrate the author's opinion as to a range of possibilities going forward. More detailed information, including actionable alerts, are available to subscribers at www.etfdigest.com
|WTI Crude Futr||45.66||0.92||2.06 %||16:59|
|US Dollar||96.04||-0.30||-0.31 %||16:59|
|Brazil||1094.154||1.01 %||1.01 %||-40.29 %|
|Russia||422.471||-0.69 %||-0.69 %||4.33 %|
|India||466.553||0.36 %||0.36 %||-6.01 %|
|China||57.137||0.00 %||0.00 %||-13.48 %|