Well, there you go; the NASDAQ Comp broke its April 19th high and in the process has managed nearly a 20% gain since the summer lows. We here at the Update are quite surprised by this feat. When a pile of money gets thrown at the market the market goes up. It seems the market has not exhaled for about four years even though we know there was a drop from the spring highs to the summer lows.
Even though the market continues to dazzle the public with its headliner highs, we feel that there just hasn’t been a good entry point. We have said this type of move is like a bull market, when buyers just can’t get in. The problem with this rally is that there never really seems to be any urgency to get in.
Today’s news on housing didn’t even really put a dent in the rally. The headlines were pretty bullish but we don’t think the news was bullish at all. The announcement that new home Sales were up for the second month in a row was the key number on which the market focused. The market assumes that the worst is behind us with regard to housing. The rest of the story was that home builders had probably slashed prices and given freebies to buyers. The average price of a new home dropped about 10% for the past year.
Thursday we heard that durable goods surged 7.8% but that stripping out commercial airline orders durable goods were only up 0.1%. So, the media found something for the bond market to cheer about and the stock market to cheer about. Fascinating. After the market closed MSFT announced fairly good earnings but not such great fourth quarter guidance. Not much going on with MSFT anyway but we thought we’d add it here, just more bullish news for the market. Right.
Wednesday’s news from the Fed confirms our belief that the market has nothing to fear from the Fed. They will not be doing anything to disrupt the cruise the stock market is on, especially going into the elections. We should have seen this as the clue back when the Fed announced that it was pausing. The precious metals complex continues to like this out to lunch Fed with inflationary pressures on.
Friday we get to see the first estimate of the third quarter GDP. We can see the headlines now, GDP down slightly but the Fed has engineered a soft landing helping to ease inflationary pressures.
The market remains extremely overbought and the VIX is in a holding pattern where no one, no one, has any fear for a market correction. BE CAREFUL.
Dow Industrials: 12,163.66 +28.98