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MV Weather Report: Bond Market Chills Bulls


Rain or shine, we review the day's biggest stock stories.


Today was one of those days that leaves you feeling confused. The market rallied in the morning on better-than-expected durable goods numbers and news that Tim Geithner is open to an SDR-linked currency system.

After the dollar was immediately crushed, the market shot higher. Then Geithner retracted his statement, saying the dollar would be the world's reserve currency for a long time.

By mid-afternoon, the market starting selling off on news of weak demand from bond auctions. This follows up similar news out of Europe. The market responded by selling off 36 points from its high.

Despite that, the S&P 500 held its 50 DMA of 793, and the market rallied into the close. Holding the 50-day moving average is a bullish sign, and I believe this is why we saw buying in the last 10 minutes of trading - not because of short covering, as reported by others.

Tomorrow will be a big trading day, as there will likely be a retest of the 50-DMA. If it holds, the rally may continue. I still think the market is way overbought, and I'm looking for opportunities on the short side. However, that may have to wait until quarter's end.

Here's a Buzz from Jeff Cooper about the games big funds play toward the end of the quarter:

"Many years ago, a friend of mine who used to be a technician at one of the largest mutual funds told me that one of their strategies was to ramp up their biggest positions the week going into quarter end making their competition chase them. But then, rather than hold on to them they would pull the plug and sell size into the position before quarter's end.

"Why? Because, if they could hurt their competition by comparison and make them lose 5% for sake of supposition it would make their own performance shine all the more so."

Tomorrow traders will be watching economic data, due out at 8:30 a.m.: Initial Jobless Claims, Continuing Claims, GDP, Core PCE and Personal Consumptions.

Have a great night, Minyans!

No positions in stocks mentioned.

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