WHAT’s UP:  Breakout! - Major US indexes breakout of their trading ranges and establish new highs.   Flu Alert goes to Devcon 5 Perhaps as early as tomorrow it will officially be a pandemic – Devcon 6.  Why the often quoted NYT columnist Tom Friedman is Wrong. Having some server problems this AM
Wall Street Bull
Mike Cane Photo



Index Percentage % Volume
Dow +2.11% down
NASDQ +2.28% up
S&P500 +2.16% up
Russell2000 +3.94% -
Technicals and Fundamentals

The Bulls are Back! - All major indexes broke out of their trading ranges. Volume, our chief confirmation factor, was (except for Dow) up and above and above average.  The FXI (shadowbanks etc.) also moved higher +4.31%, but did not break out of trading range.

Reading the Tea Leaves - The -6.1GDP number on the surface seemed bad and was worse than expected. But consumer spending was higher and consumers make up 70+% of the economy.  

Fundamentally - What investors see is a -6.1% bottom and things will improve from that number.  Perhaps we move to flat growth.  That would be a 6.1% gain in GDP.  So a bad number for GDP in this case is good. Obviously, Wall Street seems to believe the huge amounts of stimulus that the Obama administration and the Fed is pumping into the economy will work.  The shadow banks are getting favorable treatment. Obama does instill confidence and that helps.

Even the fact of a flu pandemic is not stopping the rally. The warning level went from 4 to 5 and 6 is as high as it gets.  - Market moving higher on bad news is bullish.

Technically - All charts of major indexes are showing higher highs.  This is clearly bullish. Investors411 has consistently backed this trend (Buy the Dips).

Personally – I did cut the short positions on China/Brazil – protection against the flu. (see blog last three posts) Brazil and China are still our # 1& #2 positions. Looks like I fell victim to the over hyping of the flu pandemic, but still remain cautious. All this could tern on a dime. - Mea Culpa. 

Long Term Outlook - Change to NEUTRAL from CAUTIOUSLY BEARISH if we hold above breakout levels. 

 In the short term (next few weeks/months +) things look good.  However , in the longer term the outlook still has massive storm clouds.  Also raising Asset Allocation another +5% - 30 to 70% – The amount you choose between 30% and 70% is up to your level of risk. Still believe in a pullback later in the year. These amounts will get changed on blog when I gain access

Caution - This rally is a rebound from ultra low levels and not to be confused with a long term multi year bull market.


Why Tom Friedman is Wrong

OK,  the guy is brilliant, but every time he starts writing about Iraq months/years later does a mea culpa. This time Tom Tom agrees painstakingly with Obama’s decision not have a blue ribbon committee about torture. However he also ties all this to “Democracy” in Iraq.

First Obama in his major press conference last night stated “Waterboarding was Torture” Torture is a “mistake.” However, when pressed that’s as far as he would go – No investigation. 

You can find Friedman’s “A Torturous Compromise.” at NYT site (sorry I may be having a problem with cookies and can not link to this site)

More on this on Monday – Working on technical problem now.

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