by D&D Securities Company on Oct 21, 2010
Risk on, Risk off. Risk on, Risk off. The market whipsawed the Tuesday traders and regained much of its loss. It’s like 1987 is playing out all over again. The Dow was up 129 to close at 11108, S&P up more than 12 to close above 1178 and Toronto was up almost 80 to close at 12650. Very impressive behavior and the market Mavens took note. The market signal is that it wants to go higher.
One can just imagine what happens at the Hedge Fund as they had decided the day before to unwind part of their "carry trade" and cover the US$ short and sell the Bullion long. At yesterday’s morning meeting the question is what do we do with the proceeds of effectively getting out of 2 positions. Nobody really wants to say "let's go the 2 year Treasury and get 34 bpts.” The market had a one day "pause that refreshes" and its back at it. The job at hand was to put the money out, so back came a lot of the stocks that had been sold the day before.
Concerns abound about the opposite nature of the Chinese raising rates and the Fed about to embark on QE2.0. The Beige Book was not inspiring as it showed that input costs are rising and that manufacturers have not been able to pass that through. However the mood of the consumer is a tad better and manufacturing is getting noticeable benefit from the lower US$.
There's a flood of liquidity and especially in Asia, we are told, with their economies doing better than the US, they are buying stocks. They don't know about "Plaza Accords" or the "Louvre Agreement,” they just see the prices and earnings rising. And back home in the US the Americans seem oblivious to the currency moves.
A little over 2 weeks before the mid-term elections and it does seem with China hiking rates and the Fed about to QE 2.0 that everyone’s playing nicely together. The results like E Bay are blowing estimates away and adding confidence to the Market……Invest the Money
Chart of the Day: B2Gold (BTO-T) **52 Week High
BTO hit a 52 week high yesterday, gaining on strong volume and closing at the highs. The stock has broken through resistance@ the $2.00 level.
Quote of the day
The latter stage of an economic recovery, where head count is rising and productivity is starting to fall, is the best for technology spending, and that's where we will be in 2006. Business leaders start thinking more about technology and less about questions like capacity expansion or how long the recovery will last. by Arnie Berman