The message in the caption below was very true Tuesday. If you tried to invest based on the news combined with common sense, you’d either never get out of the gate or go insane.
The tape is the news
Like you, I read the litany of bad news announced before the market opened Tuesday. And, no doubt like you, I fully expected a large sell-off at the open. But no, the market opened only slightly lower with the NASDAQ turning green in less than 30 minutes.
With PPI coming in white hot [do economic forecasters ever get this stuff right?], housing data weak [8.9% drop in nationwide prices in 2007], consumer confidence plunging [another forecast missed], foreclosures up 57%, Target (NYSE:TGT) and Macy’s (NYSE:M) guiding lower [both stocks opened higher], the GOOG slaughter continuing and so forth, bulls scoffed and started bidding stocks higher. Even bonds were bid higher despite inflation data turning negative net yields even more negative.
My initial thought was: Wow, such bearish news and such a bullish reaction! What did I do? As is my custom, I turned the PC off and went to the gym. [I mean the bars aren’t open yet.] But, if bulls were still looking for something to hang their hats on, IBM (NYSE:IBM) showed it to them with a slick piece of financial engineering.
Volume and breadth were solidly positive.
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