Stock Market Analysis

Tuesday, June 17, 2014

Final Leg Up?

The Dow gained 27 points today as investors shrugged off the effects of a higher than expected CPI number and focused on the better sales data and housing data.

A higher than expected inflation data may not necessarily be a bad thing as that is also one of the indicators of a growing economy. The only concern is not for inflation to be too high as to hurt economic growth and the current number is pretty much inline with past inflation data without any significant surprise. This is why it isn't hard for investors to look past it and continue to be bullish. In fact, the VIX dipped while the total equities put call ratio continued to tilt in favor of the bulls.

On the technical side, the Dow bounced smartly off its 30MA with little to doubt about it making yet another new high. This also falls nicely inline with my original expectation of global uncertainty from the 4th quarter onwards with a classic exhilaration bull run just before it all runs dry. In fact, this 5 years bull run from 2009 to 2014 has more or less mirrored the 5 years bull run of 2003 to 2008. History has a way of repeating itself in the stock market so I won't be surprised that this could be the final leg up, so take advantage of it while you can. This, along with the classic business cycle, the cutting of global GDP forecast by the World Bank and the Hindenburg Omen, all points towards the same story.

In fact, this could be the best time to profit from the capital markets just like back in 2007. In fact, we just took another 104% profit off our call options position on CNQ last Friday. Check out how that is done!

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