Is it Really Any Surprise?

I don't know if I mentioned it previously, but I would have been surprised if the market didn't rally out the gate today. And while anyone can make a case that sentiment is flashing warning signs just about everywhere one looks, it's still a bull market and the trend is up. Breadth was very good today to boot.

Not that I think the market needed any reason to continue higher, but we did have some market data to support higher prices.

Construction spending in November was up 0.4%, which was double the expected number and the December ISM Manufacturing Index ticked higher to 57.0 from 56.6. That was a tad below estimates, but who cares when there's a party going on.

Here's today's charts:



Amazing what a big rally can do for momentum. Both signals here are back to flashing buys.



NAHL and NYHL are also flashing buys.



Ditto for TRIN and TRINQ.



Of course BPCOMPQ can only get more bullish after a day like today. That means all seven signals are flashing buys again, which keeps the system on a buy.

I have no reason not to expect higher prices from here outside the overly bullish sentiment, although a short decline at the very least is always a possibility. I suspect any weakness will be bought quickly, but I would be remiss to suggest there is no risk in this market. The same global economic concerns are still out there, but are largely being ignored as the Fed has spiked the punch bowl. Enjoy it, one never really knows how long it will last, and it could be awhile yet.

 

[Boghie]

CH,

Remember, we are still at about -20% from the highs of 2007.

There are always problems. However, our recovery started at the -57% level. And, with the bruising tax code argument folks will believe (and I believe) that taxes cannot go up - especially if the baseline economy improves.

 

[coolhand]

You have to keep in mind that my comments are for the intermediate term only. We can easily remain in a bull market in spite of any potential intermediate term correction. I do not trade off fundamentals, although I often speak to them in my blog. It's really all about the sentinels, and they are still on a buy.

CH,

Remember, we are still at about -20% from the highs of 2007.

There are always problems. However, our recovery started at the -57% level. And, with the bruising tax code argument folks will believe (and I believe) that taxes cannot go up - especially if the baseline economy improves.

 

[Klear]

Assuming that inflation will rise starting this year, do you think the I fund would be a better bet than the c and maybe the s fund at some point this year?

 

[Klear]

thanks for your time and insightful articles over the past year.

 

[coolhand]

I'm really not sure how inflation might affect stock prices between domestic and foreign markets. It would be a function of how our currency fares in relation to other currencies and that's tangled web of unknowns. In general, as long the dollar is getting weaker, the I fund has a good chance to outperform.

Assuming that inflation will rise starting this year, do you think the I fund would be a better bet than the c and maybe the s fund at some point this year?

 

[JTH]

Thanks for posting the economic stats in your blog, otherwise I wouldn't know what's going on.

 

[coolhand]

I have a passing interest is watching market data, but never use it to manage any of my accounts. At least not directly. But it's part of what makes a market so I try to touch on it.

Thanks for posting the economic stats in your blog, otherwise I wouldn't know what's going on.