Yesterday, the markets only looked up and disregarded any negative or questionable news while the Dow powered higher by some 214 points.
All major averages followed suit, and the S&P; 500 managed to wipe out its year-to-date loss by moving into positive territory, although by only a scant +0.47%. Our hedges advanced nicely on yesterday’s rally, and our Trend Tracking Indexes (TTIs) are now within striking distance of a new Buy signal.
The domestic TTI moved to within 1.18% of breaking its long-trend line to the upside. As I mentioned last week, the international arena really picked up the slack, and our international TTI crossed above its long-term trend line by a tiny +0.10%.
I really don’t consider that move a breakout yet, so I will wait a few days for more upside confirmation and until the trend line is recomputed, which happens every Friday. This will also allow the effect of some important market data to be absorbed by the market place.
The crucial numbers this week, which could add some drama to Wall Street, are the results of the Fed’s stress test of 19 of the biggest banks (due out on Thursday) and the all important unemployment report on Friday.
If any of these numbers contain unexpected surprises, you can consider yesterday’s rally a typical pop-and-drop move since a sell off would be all but certain.
I believe that this week will offer further clues as to the direction of the stock market, at least short-term. I am comfortable with our hedged positions since they appear to give us an element of stability in an unstable world.