Bullish Trifecta?

Today’s onslaught of good news caught the bulls a little by surprise.  This was the trifecta of good news that normally would have caused some major upside fireworks, not so today.  Yes, the market did open up on the day with, as an example, the NASDAQ Comp jumping about 15 points an hour into the session.  But, the action fizzled with the Comp dropping a devilish 6.66 to close on the low for the day.

The action in the Comp the last few days has been very weak in the face of bullish optimism for that fantasy Santa rally, or is it the year end rally?  Now the bulls are saying we needed a nice refreshing pullback so we can steam forward into the end of the year.  Today’s news was met with selling and what was the cause?  Well, you know that if the economy is doing well, the Fed will need to continue raising rates, so we better sell some stocks, twisted logic.

You probably have already heard the news but here it is again.  First, the durable goods orders were up much more than expected but I was not impressed with the liberties that the media took today.  The durable goods were expected to come in up 1.5 and the reported number was 3.4.  The article describing this number said durable goods were up almost 3 times the expected amount.  I guess technically they are correct, almost 3 is not the same as 3 but it wasn’t even 2 ½ times as much.  

Second, the new home sales were up, climbing a big 13% from September to October.  The numbers under the report seemed a bit different than that plus the report is seasonally adjusted so any number of things could be in there.  The report on this that will appear in Wednesday’s WSJ says that “many analysts questioned the report’s reliability”.  Following that, the article says that inventories of unsold homes grew. Apparently, home sales in the West region grew about 50% from 311K to 457K, yeah, right.  (Maybe I should say they just about doubled, but that trick has already been done once today.)  This report is on the heels of the report on Monday that indicated existing home sales dropped 2.7%.  In any event, the bond market took a beating today.

The last report was on consumer confidence and that was up a record amount from the report last month after the hurricanes and the huge gas increases.  Now that gas prices have come down, people must be feeling better about their own situations.  

With the Dow jumping early this morning to touch the 10,950 level for the fourth day in a row, we think the market is struggling to stay up here.  The other indexes we follow have not even tried to stay up.  The Dow has now been trying to test the high back in March.  So far, the market has failed to push the Industrials above the mark set in March.  Plus, the market continues to be overbought, use caution.

Dow Industrials:  10,888.16   -2.56
RYVNX:   18.92
TLT:  90.10  (ouch)
BGEIX:  14.09