Tonight, we see that the Dow has indeed made another run over 11K and, not surprisingly, has left the broader indexes we follow in the dust. This latest run has even left the Russell 2000 lagging. This is not a bullish sign even though the headliner Dow number will be touted as big news.
Wednesday we get to hear what the new Fed Chairman has to say and that should have some bearing on the course of the market for a little while anyway. The natural course would seem to be for a pull back after this unconfirmed move up in the Dow. The market should take some time to come back a little if it wants to give the broader market a chance to catch up. So, that is the most likely scenario, tomorrow’s speech by the new Fed Head, while positively anticipated, will probably bring the market down temporarily.
That is not to say that it can’t go up because it most certainly can. We just think that if it does go up without confirmation by the broader market, it is significantly doomed. A new relative high in the Dow would certainly exacerbate an already confusing market. So, we will wait.
In the news Tuesday, retail sales were up a big 2.3% for January, with many comments on the mild weather contributing to the good sales figure. December’s numbers were revised Downward a tad.
In upcoming news, Thursday brings January housing starts (kind of a deceptive indicator on the state of the housing market due to spec homes being started) and Friday brings the Producer Price Index (PPI) as well as the Michigan consumer sentiment index. Any of these do have a potential for moving the market but we still think the big event of the week is Mr. Bernanke’s appearance on the Hill.
Be careful out there.
Dow Industrials: 11,028.39 +136.07