Friday Outlook: Ignoring Inflation

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Includes: DRR, IBB, IEF, IWM, IYR, IYT, MDY, QLD, QQQ, RXL, SKF, SPY, UDN, UGE, UUP, UYG, XHB, XLB, XLF, XLP, XLU, XLV, XLY
by: David Fry



Trading desks and hedge funds have plenty of cash on hand to pick each other’s pockets. This happened yesterday in my opinion, especially with financials which have become “trading” vehicles. After some days of decline it was time to squeeze whatever short sellers were bold enough to carry positions for more than a couple of days.

The main story remains the decline in energy and other key commodities coupled with a rising dollar. This is stimulating equity bulls who then ignore mostly terrible news from inflation, housing and, well, you name it. How long this can last is anyone’s guess since a rising dollar and falling commodity prices may just signal global economic weakness rather than US economic growth.

Volume was below average and breadth was good. You can infer by volume data in the NASDAQ the focus is on bigger names. And, don’t hold your breath but I think Yahoo Finance has fixed their math problem.

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