Ed Pennock is on vacation today

Markets exploded higher as a result of the Aussie GDP at 4.9%, China's PMI at 51.9 versus 49.4 and ISM at 56.3 against 55.5 in July (expected 52) and the employment sub sector reading was 60.4 which is the best in Decades.   The markets ignored the ADP jobs being down 10K. We had been looking for plus 15K. That auto sales being down (last year we had cash for Clunkers) was also ignored. The TSX broke above 12K (psychological barrier), the Dow closed at 10269 up 255 points and the S&P rose 31 points to short term resistance at 1080. The Vix dropped 8% and the DXY has to be expected to decline further.

We sure had a Risk Rally and it looked like 150 points of short covering plus 100 points of Day Trading because it’s the first day of the month. All the traders had to flatten their positions yesterday at month end. Today Bernanke speaks at 9am. We’ve got the jobless claims which came in in-line with expectations @ 472k. Euroland Q2 GDP was 1% down from 1.9%. Median weekly eps was up 0.5% after being down 1.3% in ‘09 and up 3.4% in ‘08 and plus 4.3% in ‘07.

So if August was this year’s September, then does it follow that September is this year’s October?  October has a history beyond the crash in 29 or the one in 87 or even the one in 98. This is the month that most frequently makes the bottom in the Indices and yet usually finishes up for the month. What will Obama do?  Tax cuts and job spending seem likely. There’s lots of data points culminating in the election which at this point looks bad for Democrats.…..for safety’s sake Stay on the Sidelines.

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

Ed is well known as an Industry veteran in the Institutional marketplace. Starting on the floor of the Montreal Stock Exchange, he became involved in the Institutional Equity market from its earliest days. He helped found such firms as Brown Baldwin Insti + more