Positive economic data from this morning and with Europe adding to its gains helped boost the market during the early going. Buying continued throughout the session, but slowed to a halt by the final hour of trading. Volume jumped day-over-day which is a good sign. However, volume was below average showing this appears to be more of a short-covering rally than institutions plowing into stocks. Volume has been quite anemic on this recent rise, but really volume hasn’t been a factor just yet. There are a few positive signs in the market. Unfortunately, they are few and far between and we need more positives to get behind the long side. The elusive follow-through-day continues to play games with this recent move off the lows. Today was just another day of waiting for price confirmation.
What is interesting is this recent headline from Business Insider:
Whether or not we are in a second technology bubble or not it appears we have more and more people looking for some sort of bubble. Does a watched pot boil? Eventually it does, but it takes much longer than you anticipate. While we have noted in past posts how expensive this market is price will be our confirmation when the real break happens.
There are a few stocks we are looking as a barometer for this market. The one thing to note is we are finding it difficult to find proper buy points. Two stocks we are looking at are well known and have been basing quite nicely. Our issue is the overall market environment isn’t such where these bases would produce gains. We could be wrong and we’ll simply go along with our price signals.
Another hiccup in this environment is inflation. We have been seeing signs of inflation and this chart is captures the view we may be in the beginning of a massive spike in inflation:
Will the Federal Reserve Bank have to raise rates to combat a rise in inflation? Oh the fun we can have trying to figure it all out. One thing is for sure price will be the only indicator to follow.
