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Why SPY? S&P Futures Reach Higher

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So, the S&P futures are smiling wide this morning as we ready to mount another Hump.

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So, the S&P futures are smiling wide this morning as we ready to mount another Hump.

Why?

Well, a few reasons. The first is that, given the nosty news from Target (TGT), Lowe's (LOW) and Lennar (LEN) yesterday, the tape hung tough. In the vein of "reaction to news being more important than news itself," is a legitimate reason for some opening oompha (absent overt overnight negatives). We heard the whisper yesterday. Not it's a shout.

The second reason? Perhaps the General Motors (GM)-UAW deal, which has tacked on a quick finski (5%) for the Motor City Maven. While I continue to view this stock as a financial in drag in a finance-based economy, that's helping the averages (of which GM is a worthy component).

Finally, there is still the prevalent mindset that weaker economic numbers bodes well for more rate cuts. That, with durable goods slumping more than expected, the Fed is on a white horse. I believe that this is majorly flawed thinking---it IS possible to have inflation (check out the equal weighted CRB) and slow growth. That's called stagflation (minus the high unemployment rate, which remains a fangled BLS brew).

There will come a point when weak numbers are viewed negatively. Whether that happens today, tomorrow, next week or next month, I'm not smart enough to know. But I'll reiterate that it's incumbent on us all to ask "why" (the FOMC is cutting rates) rather than view it as a patriotic panacea.

Finally, and while I have you, please note that the dollar is stronger this morning. While one day does not a sustained rally make, it's worthy of a mention as we piece the puzzle together. I am, in the interest of forthright honesty, skewed short with the S&P and Goldman Sachs (GS) as my primary vehicles. I pared some risk into the close (win, lose, draw) but that's how I'm hanging and, as always, I'll keep you out.

Good luck today.

R.P.

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