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Republicans

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There were primaries in Mississippi and Alabama last night. This Politico analysis by Maggie Haberman is helpful - The 5 Takeaways

Santorum has admonished the FOX network for “Shilling” for Romney.

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Comment Section

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Often the comments section contains some interesting insight into stocks from Paul R and others. Yesterday there was a heated political debate. Check it out here (scroll down)

Some of you may agree or disagree with frequent contributor George N’s comments but…

its all high fives for his son who won  an award from Bill Clinton for creating a non-racism club with 300 members in his school


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STOCKS

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Wall Street Bull & OWS Symbol

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Insight into how Investors411 evaluates stocks, markets and trends can be found in the STRATEGY Section of the blog.

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Headline

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A Stampede

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  • The fifth day of the current short term rally produced major gains in increased volume as traders began to talk about the US economy starting to get better on its own and not needing the ongoing Fed liquidity dump.
  • We are in a sustained Central Bank (ECB, our Fed and Japan) manipulated rally that began in October.
  • If stocks hold onto the most all of the big gains of a previous day or push ahead, analysts usually consider it bullish.
  • The long term trend remains (sorry for the repetition) - “Don’t fight the Central Banks – As long as they are dumping liquidity (printing money) to cover up losses anyone who has thought stocks would falter over the last three years has been on the wrong side of this trade.”

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Old Faithful

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Almost too good to be true. Old Faithful - The McClellan Oscillator – has worked yet again as an indicator of at least a short term bottom.  The 5 day rally is confirmation of this fact.

  • Our #1 technical forecasting tool, the McClellan Oscillator (MO) rose to +18.81.  (for more see  STRATEGY link at top of blog and scroll down) NO technical pressure on  either bears and bulls = NEUTRAL

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Canary in A European Coal Mine

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  • Italian 10 year bond yield fell slightly to 4.88% (7:00 AM EST) Well below the 7.00% Danger Zone.
  • The ECB is providing the liquidity to keep these bond prices low so the European canary still singing Ode to Joy.

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Bottom Line

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We had some Fed jawboning stocks higher and 15 out of 19 big US banks passing a stress test yesterday. The old bottom line is how markets react to news. In this case they stampeded. A positive reaction to news is usually a sign of more positives to come.

It is surprising that the MO move only 20 points higher. I thought we’d start moving into technically moderately overbought territory (starts at +30)  The MO works best at calling absolute highs and lows.  At this level no clear sign.

NB – The US ten year T bill broke out of its trading range. Hardly something to worry about at a low 2.107% yield. But rising rates is something to keep an eye on. (More later.)

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See Paul’s Corner in Monday’s Investors411 for a list of potential stocks. Remember the evaluations are now 3 days old.

Investors411  has a position in a homebuilders ETF – XHB and recommends a defensive position in oil price ETF’s USO or UCO (2X) for those with sizable portfolios to protect. This is to guard against an oil supply disruption.

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If the liquidity keeps flowing

stocks will keep growing

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No posts for rest of the week.

Watch the MO, if we get to close to +60 stocks are overbought and due for a correction. (+30 moderately overbought & +90 OMG overbought)

Paul almost always has insight full answers to your stock questions in the comments section of the blog.

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Longer Term Outlook

3 months+

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Still

CAUTIOUSLY BULLISH

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AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK AND POTENTIAL LOSS OF PRINCIPLE

CHECK ALL DATA, I MAKE MORE THAN GRAMMAR  ERRORS.

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