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Random Readings

 First, I want to remind everyone that there is still time to sign up for INO's Free Email Trading Course. Get 10 Trading Lessons FREE Click Here

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From Investment Postcards From Cape Town, David Blair, writer of 
The Crosshairs Trader blog, has compiled a list of simple, yet very fundamental truths for stock traders based on the letters of the alphabet, The ABC's of Stock Trading.

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Stock Trader's Almanac has named Bailout Nation: How Greed and Easy Money Corrupted Wall Street and Shook the World Economy, Revised and Updated by Barry Ritholtz the Investment Book of the Year. The book can be purchased on Amazon for $16.47.

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Kevin Lane tells us to keep an eye on sentiment. He also echoes what I have been saying for a few weeks now, we are at an important level on the S&P 500.

 

Sentiment surveys, such as the American Association of Individual Investors (AAII), are still neutral and doubting as opposed to overly bullish and embracing. Since by and large investor sentiment remains sceptical, while sideline liquidity still remains relatively high, we believe there is a good chance the S&P can take out this trend line and work higher.

Sentiment, both measured and observed, has served us well in calling market direction. Thus, given current readings of sentiment, we remain constructive, though respect the significance of the trend line as a potential supply area.

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Worried about inflation? Analysis by Paul Kasriel of The Northern Trust Company on Investment Postcards seems to think it is the long term, not short term story:

In sum, the overwhelming evidence presented here points to a Fed worrying about inflation in the early part of the next decade. It is important to note that concern about inflation is the long term story.