Friends
Stocks rallied once again today, despite a hotter than expected PPI number. What is fascinating is that the narrative from two weeks ago is now being turned on its head. Fears of inflation rearing its ugly head sent stocks into a 10% correction and bond yields higher. Just two weeks later we actually get higher than expected inflation reports (CPI and PPI) and bond yields stop rising and stocks rally. In the meantime stocks have erased more than half of the losses and are now positive for the year.
As for today, by the close the Dow Jones Industrial Average was up 306 points to finish the day at 25,200. The S&P 500 was up 32 points to close at 2,731. Gold was down a fraction to trade at $1,357 per ounce, while oil was up $.99 to trade at $61.59 per barrel WTI.
We did test the intraday low of last Tuesday once, and the 200 day moving average did barely hold, so an optimistic point of view might declare that we are successfully working our way out of the correction. But it might be wise not to get too comfortable just yet. The 10% drop in 9 trading days put a dent in the overriding complacency that was permeating the markets, but I’m not sure enough fear was introduced into the situation. I would have preferred that we test the lows at least one more time and build a base that lasted more than a few days, but these are different times. Let’s see how we end the week tomorrow.
Have a nice evening everyone.
