Another new high set by the market despite uninspiring economic data. Personal savings rate hit a new low as incomes could keep up with spending. In addition, the Dallas Fed survey dropped well below expectations. The Federal Reserve has been pumping billions into the market and we continue to see disappointing economic figures. Starting tomorrow the Fed will begin its two day meeting and all eyes will be on the Fed chief. Regardless, it is difficult to argue with the market and we’ll continue to go with the trend. Hard to fight the power of excess liquidity and it is best to stick with trend following.

Friday’s GDP report was quite disappointing showing a reading of 2.5% when economists and the market was expecting 3.0%. Excuses were plenty and the market took it in stride and followed through today. Volume wasn’t there, but it isn’t a big surprise to us as we have not been blessed with institutional volume. We only get volume at the end of the month or option expiry. Price has ruled the day and will always rule. Follow it.

The last two weeks has been quite a ride for the markets. Just a little over a week and a half ago it appeared the market was ready to keel over and begin a new leg down. Never doubt a liquidity driven market as we have just witnessed a market being able to retrace more than 100% from its move to new lows. We now have a situation where we have lower highs and higher highs. Not exactly the prototypical trend confirmation.

Tomorrow we’ll get another read from the Case-Shiller Index as well as a reading from Chicago PMI. Flash PMIs across the globe have been disappointing. Given the weakness in GDP if estimates have not come down it wouldn’t surprise us to see another disappointing economic piece of data. The trend is still up and despite the distribution in the middle of the month.

Have a great week.