In the wee hours of the morning in Europe, European leaders were able to strike a deal to a Greek haircut as well as levering up the EFSF. The news sent futures higher across the board and with the US GDP coming inline with expectations the market had all the fuel it need to push higher. Despite an early morning bout of selling, the market was able to rocket off the lows finishing the session just off the highs. Volume exploded today as institutions were quick to get back into the market hoping they would not miss any gains they may have already missed with the moves off the lows. A solid day worth of gains and today was certainly an exclamation point on the recent rally off the October lows.
The recent rally also spurred the number of bulls in the most recent AAII survey. The number of bulls jumped to 43% while bears were decimated showing only 25%. Given the recent gains the market is quite frothy at these levels. A pause here would be healthy for the market to catch its breath.
If you haven’t been accumulating stock here, don’t worry you can play catch up and still be fine if this trend continues. Often times feeling left out will lead to poor decision making feeling like you need to chase after stocks. It is a dangerous game, stick to sound entries and you can more than make up what you may have missed. If you have been accumulating stock it is important to note how your stocks act as this market moves forward. Your portfolio is your greatest guide to where the stock market is about to head. In July, many of the stocks we watched and held were flashing warning signals (sell signals) well before the market broke down. Pay attention to your stocks!
We should still be paying attention to distribution days, but now with the major indexes above the 200 day moving average we must be aware how the act here. Any sort of reversal here back through the 200 day with volume and our leaders getting whacked would be a major warning signal. Remember, it is your stocks first and market second. You’ll get a feel for how this market will fare if you pay attention to your stocks first then the market itself.
No options expiry tomorrow, but we do get a bit of economic data. Personal Income and spending are due out with PCE data at 8:30am. University of Michigan consumer confidence shows up at 9:55am EST. After that, it is smooth sailing into the weekend, or so we would like to think!
We are in a Quantitative Easing world, we must adapt. Money printing is the only tool left for central planners to use. Have a great weekend!