Ping Pong!

We penned these words Tuesday night:

“You know our stance. It is simple. While the major indices continue to be range-bound (with a little dose of downside recently), many areas of the market remain in poor shape. That has not changed…BUT THE SHORTER TERM ACTION MAY HAVE CHANGED. By the close, Tuesday’s action felt like a market being sold out on a near term basis as the Nasdaq-types were being slaughtered again, only to reverse a good portion of it. On top of that, the very important SEMIS and BIOTECHS found supportive action right where they needed to…at the all-important 50 day average. The 50 day average is a place where the big money stands up to defend on pullbacks. Strongest action remains in a slew of financials and a decent amount of growth names. Transports continue to lag the most. Remember, there is no chance of a bear market of consequence if financials continue to have the bid.”

Fast forward to this morning. Amazing to watch the past 4 days to the downside were basically wiped out in the first few hours of the Wednesday’s trading day. But we are just back into the range. Of course, the hope is we bust out of this range to the upside…which is not too far away. Sector-wise, we do not think much has changed. The FINANCIALS continue to lead as spreads continue to widen. The very important Biotechs and Semis held support.  The best news is the pullbacks continue to be minor and continue to be bought up with ease. We just need to see major indices bust out for another leg up. Yesterday’s action went a long way in giving the market a chance for that.

Lastly, we wanted to cover what is now becoming a mantra of pundits and that is global growth is now picking up. Their case is that employment figures are better and interest rates on the long end are spiking up. The belief is rates are smelling better days ahead. We do not pretend to be Milton Friedman but if memory serves us right, we have seen and heard this before. Not sure we would jump the gun but would be all for it if true. Our biggest problem remains all data points and stats are off of trillions in negative rates, 0% most everywhere and the continuance of printed money. Can one believe economies can stand on their own two feet if rates were not rigged and manipulated?