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The Life of Brian

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Holy economic releases Batman... I mean Bondman. While today is Brian's time to shine, I wanted to throw in my two cents regarding the economic releases, the dollar and the stock market.

Recent economic news confirms there was no post-war surge in spending by either corporations or individual consumers. As Brian has been pointing out, there has been a surge of corporate bond offerings. As a result, there is likely to be a pick up in corporate spending when money received by companies from the recent slew of bond offerings gets put to work.

This is a pivotal time for stocks because the market indices, sectors, industries and most individual stocks are at or near resistance, overbought on an intermediate-term basis and they're not overly cheap.

I view my job as identifying the next sustainable move. As I write, the market is trading higher on news that doesn't justify it: IBM (IBM:NYSE) CEO Samuel Palmisano said "things are stabilizing." From my standpoint, that type of news is a positive surprise when IBM is closer to the low of $55, than when it is at its current high of $90. It also makes no sense -- absent a clear stop price just above the recent highs -- to bet on an imminent move lower when there is this much momentum.

I can see both sides of the argument clearly enough to suggest keeping very tight stops on uncomfortable long positions and focusing on rotation vs. broad market move. Clearly the lower dollar argues against buying stocks right now, but can you imagine if stocks hold with dollar getting creamed? Imagine if the dollar spikes and attracts more money to the U.S. markets. If someone tells you which direction it will go RIGHT NOW - they are guessing and as you know, I don't like to guess.

No positions in stocks mentioned.
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