Market Commentary

Business Posts Moving the
Markets that I Found Interesting This Week:

• Hussman: Rally Has Ignored Fundamentals & Will Be Corrected
  Painfully. (BizInsider)
• Earnings Growth: Are the Gains Too Good to Last? -  (BusinessWeek)
• The Looming De-Leveraging Challenge. (McKinsey
  Quarterly)
• UBS to Retail Clients: Stock Boom Is Over. (InvestmentNews)
• Worried about the PIIGs: Was Greece's Rescue Futile & is
  Portugal
  Next? (WikInvest)
• More Posts
  Moving the Markets.

Lighter Ideas and
Fun Links
that I Found Interesting This Week

• Microsoft Won 10 Times More Patents Than Apple In 2009.
  (BusinessInsider)
• Peek at Tomorrow: Ten Technology Incubators Changing The World.
  (Forbes)
• Computer Science Loses to Math in New Hiring Formulas. (WSJ)
• Bacterial Colonies Show Intelligence Coping with a Hostile
  Environment. (Seed)
• World Air Traffic Time-Lapse Video Over a 24-Hour Period.
  (HuffingtonPost)
• More
  Posts with Lighter Ideas and Fun Links.

The rally has been strong. With the Dow Jones Industrial Average above 11,200, some are calling for an extended Bull market.

How Strong Has Breadth Been?  The Answer is “Pretty Strong“.

With the advance over the past two months, the percentage of stocks above their 50-day moving average surged back towards prior highs. This chart shows that indicator is above 85% for the first time since January.

Some commentators take this as a strong bullish sign.  It helps to think of this indicator like a momentum oscillator. As such, it can become overbought and remain overbought during a strong uptrend. While relatively high readings may be considered overbought, it is also a sign of strength as long as this indicator remains at high levels. However, as the chart shows, a sharp decline below this level would increase the odds of a correction unfolding.

What is the State of the Current Economy?

Russell Investments publishes a nice summary of Market indicators.  In general, it shows that interest rates are high, and mortgage
delinquencies are nearly off-the-chart, while most other indicators are
at
the low ends of their typical ranges.

Also worth noting, here, the VIX
decreased to its lowest month-end level in over 33 months.

Volatility is Coming Back to the Markets, Though.

When the SEC announced civil fraud charges against Goldman Sachs, its shareholders proceeded to lose $12 billion.

Here is what their stock is doing now.

Flash Player 9 or higher is required to view the chart
Click here to download Flash Player now

View the full NYSE:GS chart at Wikinvest

If you are interested, the lawsuit stems from Goldman’s 2007 Abacus
deal.  Here
is the presentation document they used to sell that deal. 

Here are some of the news items about this that caught my eye:

• Why The SEC’s Theory Against Goldman Will Fail. (Forbes)
• Goldman
  Sachs & the SEC – Greedy Until Proven Guilty. (Economist)
• Goldman
  Sachs and America’s Regulation & Supervision Paradox. (Globalist)
• Financial
  Reform? Obama to Wall St.: ‘Join Us, Instead of Fighting Us’. (NYTimes)

The Lighter Side of the Issue.

 Did you hear that
Goldman Sachs made the Iceland volcano erupt? It did pretty well
shorting airlines. 

The Goldman Sachs lawsuit and financial reform are becoming common topics of every-day humor.

It’s one thing when the business press writes about a topic, it’s another when it is the subject of a David Letterman Top-10 List, an on-going discussion on Jon Stewart, and the opening segment of Saturday Night Live.  What do you think it means that this issue is now in the mass media?

Business Posts Moving the
Markets that I Found Interesting This Week:

• Intel Profits and Outlook Blow Past Expectations (DailyFinance)
• IBM Q1 Earnings Beat Street: Growth May Be Returning To The Tech
  Sector. (InfoWeek)
• Data Shows U.S. Service Sector is Expanding. (Time)
• Speculators Predict A 20% Collapse In
  The NASDAQ. (BusinessInsider)
• Louis
  Navellier on Why the Market’s Rally Will End Next Week.
  (Forbes)
• More Posts
  Moving the Markets.

Lighter Ideas and
Fun Links
that I Found Interesting This Week

• Third of U.S. Teens With Phones Text 100 Times a Day. (Reuters)
• Arizona ‘Birther Bill’ Requires Obama to Show Birth Certificate.
  (Newser)
• Next Generation iPhone Found in a Bar. Here Are the Details. (YNews)
• Cirque du Soleil Plans Michael Jackson Shows. (WSJ)
• Does Brain Training Work? Doing Anything is Better
  than Nothing. (NewScientist)
• More
  Posts with Lighter Ideas and Fun Links.

The rally has been strong. With the Dow Jones Industrial Average above 11,200, some are calling for an extended Bull market.

How Strong Has Breadth Been?  The Answer is “Pretty Strong“.

With the advance over the past two months, the percentage of stocks above their 50-day moving average surged back towards prior highs. This chart shows that indicator is above 85% for the first time since January.

Some commentators take this as a strong bullish sign.  It helps to think of this indicator like a momentum oscillator. As such, it can become overbought and remain overbought during a strong uptrend. While relatively high readings may be considered overbought, it is also a sign of strength as long as this indicator remains at high levels. However, as the chart shows, a sharp decline below this level would increase the odds of a correction unfolding.

What is the State of the Current Economy?

Russell Investments publishes a nice summary of Market indicators.  In general, it shows that interest rates are high, and mortgage
delinquencies are nearly off-the-chart, while most other indicators are
at
the low ends of their typical ranges.

Also worth noting, here, the VIX
decreased to its lowest month-end level in over 33 months.

Volatility is Coming Back to the Markets, Though.

When the SEC announced civil fraud charges against Goldman Sachs, its shareholders proceeded to lose $12 billion.

Here is what their stock is doing now.

Flash Player 9 or higher is required to view the chart
Click here to download Flash Player now

View the full NYSE:GS chart at Wikinvest

If you are interested, the lawsuit stems from Goldman’s 2007 Abacus
deal.  Here
is the presentation document they used to sell that deal. 

Here are some of the news items about this that caught my eye:

• Why The SEC’s Theory Against Goldman Will Fail. (Forbes)
• Goldman
  Sachs & the SEC – Greedy Until Proven Guilty. (Economist)
• Goldman
  Sachs and America’s Regulation & Supervision Paradox. (Globalist)
• Financial
  Reform? Obama to Wall St.: ‘Join Us, Instead of Fighting Us’. (NYTimes)

The Lighter Side of the Issue.

 Did you hear that
Goldman Sachs made the Iceland volcano erupt? It did pretty well
shorting airlines. 

The Goldman Sachs lawsuit and financial reform are becoming common topics of every-day humor.

It’s one thing when the business press writes about a topic, it’s another when it is the subject of a David Letterman Top-10 List, an on-going discussion on Jon Stewart, and the opening segment of Saturday Night Live.  What do you think it means that this issue is now in the mass media?

Business Posts Moving the
Markets that I Found Interesting This Week:

• Intel Profits and Outlook Blow Past Expectations (DailyFinance)
• IBM Q1 Earnings Beat Street: Growth May Be Returning To The Tech
  Sector. (InfoWeek)
• Data Shows U.S. Service Sector is Expanding. (Time)
• Speculators Predict A 20% Collapse In
  The NASDAQ. (BusinessInsider)
• Louis
  Navellier on Why the Market’s Rally Will End Next Week.
  (Forbes)
• More Posts
  Moving the Markets.

Lighter Ideas and
Fun Links
that I Found Interesting This Week

• Third of U.S. Teens With Phones Text 100 Times a Day. (Reuters)
• Arizona ‘Birther Bill’ Requires Obama to Show Birth Certificate.
  (Newser)
• Next Generation iPhone Found in a Bar. Here Are the Details. (YNews)
• Cirque du Soleil Plans Michael Jackson Shows. (WSJ)
• Does Brain Training Work? Doing Anything is Better
  than Nothing. (NewScientist)
• More
  Posts with Lighter Ideas and Fun Links.

At the end of the week, the markets were pretty much where they started.  So nothing happened, right?

Sometimes weeks like this are important.  The Japanese candlestick chart pattern this type of action produces is called a Doji.  After a long up-trend, this pattern often marks a turning-point.

Here, there is a Doji resting on the recent up-trend line (drawn with the red arrow) and the support-resistance level (noted with the orange dashed line).  This creates an easy decision-zone to watch.

From my perspective, a little pull-back would be welcome here.

Earnings Season Is Here.

During the past few quarters, companies have shown that they can cut-back and save money.  Now may be the time investors want to see some sales growth. 

The results are not as important to me as the market's response.  Are people going to keep buying, or start selling the news?  Here are a few items that caught my eye this past week.

• JPMorgan Earns $3.3 Billion in 1st Quarter, a 55% increase of Profits. (DealBook)
• GM Posts $4.3 billion Loss, Says 2010 Profit Possible. (Reuters)
• Intel Profits and Outlook Blow Past Expectations   (DailyFinance) 

Of course, the news that the government was suing Goldman Sachs also moved the market.  How it ultimately moves Goldman is still to be seen.  Again, though, what I'll be watching is whether this will become a buying opportunity or a trigger for further selling.  That will likely tell us how healthy the rally remains.

Banks Were Masking Risk Levels From the Public.

On a related topic, according to the WSJ, major banks have masked their risk levels in the past five quarters by temporarily lowering their debt just before reporting it to the public.  Here is an interactive graphic to illustrate what happened.

More Banks Are Closing.

Also, Regulators shut down eight more banks last week; that makes 50 so far this year. Last year saw 140 bank failures, the highest annual number since the 1992 Savings & Loan crisis.  In comparison, only twenty-five banks failed in 2007 or 2008. Another chart to put this in perspective is here.

Expect to
Hear A Lot More About the Need For More Regulation.

Business Posts Moving the
Markets that I Found Interesting This Week:

• Bernanke's Dilemma: Hyperinflation and the U.S. Dollar (SeekingAlpha)
• A Dangerous Omen Looms for Bonds. (Money)
• Three Ring Circus: Labor Statistics, Treasury & Commerce Dept. (Sutton)
• Firesales Being Held By Bankrupt
  States: What Can We Learn? (BusinessInsider)
• Innovation,
  by Order of the Kremlin – Russia's Silicon Valley.
  (NYTimes)
• More Posts
  Moving the Markets.

Lighter Ideas and
Fun Links
that I Found Interesting This Week

• Twitter Predicts Box-Office Sales – Will It Soon Predict Markets? (FastCompany)
• Is the EMP the Next Weapon of Mass Destruction? (Time)
• Cosmic Archaeology – Looking for New Ways of Finding Signs of Life. (Economist)
• 21st Century Makeover: Shakespeare's Romeo & Juliet in Twitter
  Twist. (Reuters)
• Fighting Allergies by Mimicking Parasitic Worms? (TechnologyReview)
• More
  Posts with Lighter Ideas and Fun Links.

At the end of the week, the markets were pretty much where they started.  So nothing happened, right?

Sometimes weeks like this are important.  The Japanese candlestick chart pattern this type of action produces is called a Doji.  After a long up-trend, this pattern often marks a turning-point.

Here, there is a Doji resting on the recent up-trend line (drawn with the red arrow) and the support-resistance level (noted with the orange dashed line).  This creates an easy decision-zone to watch.

From my perspective, a little pull-back would be welcome here.

Earnings Season Is Here.

During the past few quarters, companies have shown that they can cut-back and save money.  Now may be the time investors want to see some sales growth. 

The results are not as important to me as the market's response.  Are people going to keep buying, or start selling the news?  Here are a few items that caught my eye this past week.

• JPMorgan Earns $3.3 Billion in 1st Quarter, a 55% increase of Profits. (DealBook)
• GM Posts $4.3 billion Loss, Says 2010 Profit Possible. (Reuters)
• Intel Profits and Outlook Blow Past Expectations   (DailyFinance) 

Of course, the news that the government was suing Goldman Sachs also moved the market.  How it ultimately moves Goldman is still to be seen.  Again, though, what I'll be watching is whether this will become a buying opportunity or a trigger for further selling.  That will likely tell us how healthy the rally remains.

Banks Were Masking Risk Levels From the Public.

On a related topic, according to the WSJ, major banks have masked their risk levels in the past five quarters by temporarily lowering their debt just before reporting it to the public.  Here is an interactive graphic to illustrate what happened.

More Banks Are Closing.

Also, Regulators shut down eight more banks last week; that makes 50 so far this year. Last year saw 140 bank failures, the highest annual number since the 1992 Savings & Loan crisis.  In comparison, only twenty-five banks failed in 2007 or 2008. Another chart to put this in perspective is here.

Expect to
Hear A Lot More About the Need For More Regulation.

Business Posts Moving the
Markets that I Found Interesting This Week:

• Bernanke's Dilemma: Hyperinflation and the U.S. Dollar (SeekingAlpha)
• A Dangerous Omen Looms for Bonds. (Money)
• Three Ring Circus: Labor Statistics, Treasury & Commerce Dept. (Sutton)
• Firesales Being Held By Bankrupt
  States: What Can We Learn? (BusinessInsider)
• Innovation,
  by Order of the Kremlin – Russia's Silicon Valley.
  (NYTimes)
• More Posts
  Moving the Markets.

Lighter Ideas and
Fun Links
that I Found Interesting This Week

• Twitter Predicts Box-Office Sales – Will It Soon Predict Markets? (FastCompany)
• Is the EMP the Next Weapon of Mass Destruction? (Time)
• Cosmic Archaeology – Looking for New Ways of Finding Signs of Life. (Economist)
• 21st Century Makeover: Shakespeare's Romeo & Juliet in Twitter
  Twist. (Reuters)
• Fighting Allergies by Mimicking Parasitic Worms? (TechnologyReview)
• More
  Posts with Lighter Ideas and Fun Links.

The Dow Jones Industrial Average traded above 11,000 for the first time since 2008. The real question is whether that is a sign of continued strength or that the rally has climbed too far, too fast?

Smart Money – Dumb
Money Confidence Index.

The chart, below, compares the bets made by small traders (a.k.a. the "Dumb
Money"), to those of large commercial hedgers (a.k.a. the "Smart
Money").

In practice, Confidence Index readings rarely get below
30% or above 70% (they usually stay between 40% and 60%). When they
move outside of those bands, it's time to pay attention.

Even
more noteworthy is when there is a wide confidence spread with bullish bets by the Dumb Money and bearish bets by the Smart Money. This type of
sentiment
spread only happens a few times a year. We
often get substantial bullish reversals when that happens.

Conventional trading wisdom says that Crowds are
usually wrong at turning-points.  That doesn't mean they are wrong all
the time (yet I take special notice when the Smart Money clearly disagrees).

Consumer Credit Woes Adding Fuel to the Doubt Fires.

Here is a chart from BusinessInsider showing the Fed's latest consumer credit reading. After starting to recover, total outstanding consumer credit had a massive month-over-month decline.

It is tough to stage a lasting recovery without consumers. 

So Where Is the Money Coming From?

U.S. Federal debt has increased rapidly.

In a related chart, Doug Short created an
inflation-adjusted view of the debt and an overlay of the tax brackets.  With the 2001 and 2003 tax cuts expiring this year, the question is whether the gross
federal debt will be a factor in determining the direction of future tax
rates? Perhaps, like a young household with good jobs buying a home, the
US can afford the rising level of debt?  What do you think?

Speaking of Debt-Laden Countries.

European governments on Sunday offered debt-laden Greece a rescue package worth as much as 45 billion euros ($61 billion) at below-market interest rates as they try to end Greece's fiscal crisis and restore confidence in the euro.

Business Posts Moving the
Markets that I Found Interesting This Week:

• Double Dip Watch: Brown Shoots? (Yelnick)
• Geithner Speaks: No End to U.S. Housing Handouts. (WSJ)
• Lehman Chief Warns of More Big Bank Failures. (CreditWritedowns)
• Speculators: The Early Warning System for Markets. (NYTimes)
• Seabreeze's Kass on U.S. stocks: 'I Have Been Wrong'. (Reuters)
• More Posts
  Moving the Markets.

Lighter Ideas and
Fun Links
that I Found Interesting This Week

• Math Genius Turns Down $1M Prize For Solving Proof Problem. (Newser)
• Why Starbucks' Pricing Challenges Are About to Get Worse?
  (Minyanville)
• The Caffeine Debate Continues. (TonyHorton)
• Has Viral Gone Viral? Chatroulette has 1M daily visitors, in just 3
  months. (NYTimes)
• Game of Death: French TV Shocks with Torture Experiment. (Time)
• More
  Posts with Lighter Ideas and Fun Links.

The Dow Jones Industrial Average traded above 11,000 for the first time since 2008. The real question is whether that is a sign of continued strength or that the rally has climbed too far, too fast?

Smart Money – Dumb
Money Confidence Index.

The chart, below, compares the bets made by small traders (a.k.a. the "Dumb
Money"), to those of large commercial hedgers (a.k.a. the "Smart
Money").

In practice, Confidence Index readings rarely get below
30% or above 70% (they usually stay between 40% and 60%). When they
move outside of those bands, it's time to pay attention.

Even
more noteworthy is when there is a wide confidence spread with bullish bets by the Dumb Money and bearish bets by the Smart Money. This type of
sentiment
spread only happens a few times a year. We
often get substantial bullish reversals when that happens.

Conventional trading wisdom says that Crowds are
usually wrong at turning-points.  That doesn't mean they are wrong all
the time (yet I take special notice when the Smart Money clearly disagrees).

Consumer Credit Woes Adding Fuel to the Doubt Fires.

Here is a chart from BusinessInsider showing the Fed's latest consumer credit reading. After starting to recover, total outstanding consumer credit had a massive month-over-month decline.

It is tough to stage a lasting recovery without consumers. 

So Where Is the Money Coming From?

U.S. Federal debt has increased rapidly.

In a related chart, Doug Short created an
inflation-adjusted view of the debt and an overlay of the tax brackets.  With the 2001 and 2003 tax cuts expiring this year, the question is whether the gross
federal debt will be a factor in determining the direction of future tax
rates? Perhaps, like a young household with good jobs buying a home, the
US can afford the rising level of debt?  What do you think?

Speaking of Debt-Laden Countries.

European governments on Sunday offered debt-laden Greece a rescue package worth as much as 45 billion euros ($61 billion) at below-market interest rates as they try to end Greece's fiscal crisis and restore confidence in the euro.

Business Posts Moving the
Markets that I Found Interesting This Week:

• Double Dip Watch: Brown Shoots? (Yelnick)
• Geithner Speaks: No End to U.S. Housing Handouts. (WSJ)
• Lehman Chief Warns of More Big Bank Failures. (CreditWritedowns)
• Speculators: The Early Warning System for Markets. (NYTimes)
• Seabreeze's Kass on U.S. stocks: 'I Have Been Wrong'. (Reuters)
• More Posts
  Moving the Markets.

Lighter Ideas and
Fun Links
that I Found Interesting This Week

• Math Genius Turns Down $1M Prize For Solving Proof Problem. (Newser)
• Why Starbucks' Pricing Challenges Are About to Get Worse?
  (Minyanville)
• The Caffeine Debate Continues. (TonyHorton)
• Has Viral Gone Viral? Chatroulette has 1M daily visitors, in just 3
  months. (NYTimes)
• Game of Death: French TV Shocks with Torture Experiment. (Time)
• More
  Posts with Lighter Ideas and Fun Links.

The rally continues, and the S&P 500 has gotten back to new highs for the past year.  Pretty
impressive on many fronts.  How does it compare to other markets
though?  This chart shows how several other world markets have done in the past twelve months.

This quick glance around the globe shows remarkably similar performance across the markets. Note how closely the price patterns and peaks and valleys are to each other.

It brings up two questions:

1. Are these countries each really doing the same things right and
   wrong?
2. Are world-wide expectations and responses really this similar?

To get a closer look for yourself, here is a link to the charts.

Perhaps more importantly, it brings up a
third question:
What's really causing the markets to behave so
similarly?

Recognizing What Is Happening, Is the First Step to Profiting From It.

To profit in trading, it's more important to recognize what's happening,
rather than to understand what's happening.

The strength of the rallies don't make sense to me based on logic.  However, trends don't depend on logic. So, I dusted-off my copy of Trend Following and will simply ride the bucking
bronco.

But I Still Want to Know Why … Don't You?

Occam's Razor suggests that the simplest explanation is most likely to be correct. So, when markets move in a virtual lockstep (despite many unsettling global variables), let's look for simple explanations.

Here are a few ideas (ranging from silly to plausible).

•  After watching the movie 2012, world leaders decided the one who dies
  with the most toys wins.
• Human nature is consistent across cultures.
• The recession is over, and we have begun a new global bull market.
• Something unusual is happening, and we just don't know what it is.
• With consumers mostly out of the market, institutions figured-out how to buy and sell from each other, making relatively easy profits with minimal risk.
• Governments agreed to temporarily suspend speculating in each other's
  markets, other than in the normal course of business.
• Governments and central banks agreed to cooperate. Don't fight the Fed, especially when it's a cartel of Feds.

From a Traders Perspective …

There are still many things to watch, from a trader's perspective, despite the strong correlation among markets. For example: divergence patterns can provide early indications of moves in either direction; relative strength comparisons can show which markets are more likely to over or under-perform; and volume spikes can indicate something unusual happening. Nonetheless, the simple observation is that markets are trending higher, so the safest assumption is that the trend continues until evidence proves otherwise.

My grandfather used to say: "you can fool some people, some of the time; but you can't fool all of the people, all of the time." He was not an exceptionally well-educated man, but he was a professional wrestler … so he knew something about stagecraft.  My guess is that one of the actors breaks character soon.  That tends to happen in most cartels.

Focus on the Global Economy as Debt Worries Rise.

Greece continues to stay in the news because a sustainable debt solution has not been agreed to and implemented. There are reports that smart-money is starting to bet against Greece.

America is not the next Greece, says Simon Johnson, MIT professor and former director of research for the IMF.

Have a good week.

Business Posts Moving the
Markets that I Found Interesting This Week:

• Nice Summary of Employment Trends and Statistics (Ritholtz)
• Is the Next Wave of Inflation on the Way? (Fortune)
• U.S. Bankruptcy Filings Rise to Highest Since 2005. (BankTech)
• Europe's Economic Woes: The PIIGS that Won't Fly. (Economist)
• Blog Post Insights on Gambling vs. Trading. (Derek Hernquist)
• More Posts
  Moving the Markets.

Lighter Ideas and
Fun Links
that I Found Interesting This Week

• April Fools 2010: Here's a List of Some of the Better Jokes.
  (TechCrunch)
• Patent Power – Who's Winning the Innovation Game This Year? (Spectrum)
• Harvard Admits Record-Low 6.9% as Applicants Increase. (Bloomberg)
• How The New Healthcare Bill Will Control Your Big Mac Urges?
  (ButThenWhat)
• March Madness Team Comparison Data Visualization Tool.
  (TableauSoftware)
• More
  Posts with Lighter Ideas and Fun Links.

The rally continues, and the S&P 500 has gotten back to new highs for the past year.  Pretty
impressive on many fronts.  How does it compare to other markets
though?  This chart shows how several other world markets have done in the past twelve months.

This quick glance around the globe shows remarkably similar performance across the markets. Note how closely the price patterns and peaks and valleys are to each other.

It brings up two questions:

1. Are these countries each really doing the same things right and
   wrong?
2. Are world-wide expectations and responses really this similar?

To get a closer look for yourself, here is a link to the charts.

Perhaps more importantly, it brings up a
third question:
What's really causing the markets to behave so
similarly?

Recognizing What Is Happening, Is the First Step to Profiting From It.

To profit in trading, it's more important to recognize what's happening,
rather than to understand what's happening.

The strength of the rallies don't make sense to me based on logic.  However, trends don't depend on logic. So, I dusted-off my copy of Trend Following and will simply ride the bucking
bronco.

But I Still Want to Know Why … Don't You?

Occam's Razor suggests that the simplest explanation is most likely to be correct. So, when markets move in a virtual lockstep (despite many unsettling global variables), let's look for simple explanations.

Here are a few ideas (ranging from silly to plausible).

•  After watching the movie 2012, world leaders decided the one who dies
  with the most toys wins.
• Human nature is consistent across cultures.
• The recession is over, and we have begun a new global bull market.
• Something unusual is happening, and we just don't know what it is.
• With consumers mostly out of the market, institutions figured-out how to buy and sell from each other, making relatively easy profits with minimal risk.
• Governments agreed to temporarily suspend speculating in each other's
  markets, other than in the normal course of business.
• Governments and central banks agreed to cooperate. Don't fight the Fed, especially when it's a cartel of Feds.

From a Traders Perspective …

There are still many things to watch, from a trader's perspective, despite the strong correlation among markets. For example: divergence patterns can provide early indications of moves in either direction; relative strength comparisons can show which markets are more likely to over or under-perform; and volume spikes can indicate something unusual happening. Nonetheless, the simple observation is that markets are trending higher, so the safest assumption is that the trend continues until evidence proves otherwise.

My grandfather used to say: "you can fool some people, some of the time; but you can't fool all of the people, all of the time." He was not an exceptionally well-educated man, but he was a professional wrestler … so he knew something about stagecraft.  My guess is that one of the actors breaks character soon.  That tends to happen in most cartels.

Focus on the Global Economy as Debt Worries Rise.

Greece continues to stay in the news because a sustainable debt solution has not been agreed to and implemented. There are reports that smart-money is starting to bet against Greece.

America is not the next Greece, says Simon Johnson, MIT professor and former director of research for the IMF.

Have a good week.

Business Posts Moving the
Markets that I Found Interesting This Week:

• Nice Summary of Employment Trends and Statistics (Ritholtz)
• Is the Next Wave of Inflation on the Way? (Fortune)
• U.S. Bankruptcy Filings Rise to Highest Since 2005. (BankTech)
• Europe's Economic Woes: The PIIGS that Won't Fly. (Economist)
• Blog Post Insights on Gambling vs. Trading. (Derek Hernquist)
• More Posts
  Moving the Markets.

Lighter Ideas and
Fun Links
that I Found Interesting This Week

• April Fools 2010: Here's a List of Some of the Better Jokes.
  (TechCrunch)
• Patent Power – Who's Winning the Innovation Game This Year? (Spectrum)
• Harvard Admits Record-Low 6.9% as Applicants Increase. (Bloomberg)
• How The New Healthcare Bill Will Control Your Big Mac Urges?
  (ButThenWhat)
• March Madness Team Comparison Data Visualization Tool.
  (TableauSoftware)
• More
  Posts with Lighter Ideas and Fun Links.

March Madness is in full force.  What's a $ Trillion here, or a $ Trillion there?

A Look at the Markets.

Most people consider it "bullish" when markets go up 14 of 16 days.  That should make people happy, right?

Recently, though, I've had conversations with several "old-pro" traders who expressed a sense of frustration. They view the recent push higher with skepticism. Trading discipline is allowing them to make money on the upside, but it's not as satisfying as being "right".

What do the Charts Show?

Let's look beyond the obvious up-trend.  The following chart and video, from Brian Shannon's Alphatrends site, shows that price is now below the volume-weighted average price paid since Fed Decision to leave rates unchanged.

Some see the U.S. Market's continued relative strength as a precursor to a new leg of the bull market, while
others see it as a temporary anomaly.

Adding to the bearish case is that several sentiment indicators show
very little fear. The VIX
is moving back to the extreme levels of complacency. Odd-lot shorts
recorded a 13 week low, indicating that the "little guy" has virtually
given up on shorting. Likewise, the lack of fear is downright scary when
you look at CBOE's
Equity Put-to-Call
Ratio. These readings are contrary indicators, meaning they often occur at
turning points in the market.

And with quad-witching
expiration behind us, and an unpopular health-care issue in
the news, the bears will have another chance to show their conviction … or lack of it. 

We'll see what happens.  I hope you have a good week.

Business Posts Moving the
Markets that I Found Interesting This Week:

• Nice Overview, Weighing the Decision on Health Legislation. (OldProf)
• Polls Show Only 27% Believe U.S. Heading in Right Direction. (Rasmussen)
• Federal Reserve Faces Challenges and Changes. (Atlantic)
• Pandit Sees Revival of Citi’s Fortunes. (FT)
• What Does the VIX Really Tell Us Here? (Minyanville)
• More Posts
  Moving the Markets.

Lighter Ideas and
Fun Links
that I Found Interesting This Week

• Apple Selling 20,000 iPads Per Hour – that's $10 Million per hour.
  (BizInsider)
• Microsoft Launching Office 2010 this May. (Infoworld
  & ZDNet)
• Secret of a Happy Marriage? A Wife 27% Smarter Than Her Husband.
  (D-Minds)
• How March Madness Breaks Down … Academically? (USNews)
• Were You Born to Be a Billionaire? (Forbes)
• More
  Posts with Lighter Ideas and Fun Links.