There is no ceiling to this market. Yesterday's move was attributed to short covering and hedge fund buying to keep pace with the market. Specifically, action was centered around retail and bank shares from what we can gather. We did find one very great piece of news in the headlines. The federal deficit continues to close the gap and looks better than expected:
The federal deficit was sharply narrower through the first nine months of this budget year as the growth in revenue continues to outpace spending growth. The Treasury Department reported that the government ran a surplus of $27.48 billion in June, up 34% from the $20.52 billion surplus recorded in June 2006. The government normally runs a surplus in June, a month when taxpayers and corporations make quarterly payments to the Internal Revenue Service. The total deficit through the first nine months of the budget year, which began Oct. 1, is $120.97 billion, down 41% from the same period a year ago, when the deficit totaled $206.5 billion. - Associated Press
In the past we where concerned about “The Crowding Out Effect“. This is encouraging news, as it is one less item to potentially push rates up and further break the economy.
We look forward to [Friday's] market action to see if there is any follow through. Additionally, we thought the analysis from Bespoke was very interesting (click here)