Yachtsman Market Update

 

Wednesday, April 16, 2008

 

S&P 500 Futures

As I discussed Monday, the market was waiting to see how the PPI, CPI and earnings came out before it decided what kind of mood it wanted to be in going into this week. Well, obviously, the INTC, JPM, WFC and now IBM earnings are setting the tone for the market and the positive comments by INTC and IBM are taking us higher on the indices while moving bonds to six week lows on price and highs on yield. That means money is coming out of bonds and going into stocks today. Watch the two year Treasury. If it does move back above 2% that will indicate more money is coming out of bonds to take stock higher. Even $115 crude did not slow down the advance.

The Transports hit an 8 month high today as our railroads hit new highs while the VIX, a measure of fear and volatility, purred like a kitten registering a yearly low below 21. As I mentioned a couple weeks ago the spiking downside volatility was giving way to a more measured  response to the news flow as good news was good and bad news was no longer awful. That’s what’s playing out today as Retail Sales were better than expected but inflation as measured by the PPI and CPI was a bit hotter than the Fed or the consensus forecasted. But all is well in Mudville as the Mighty Casey did not strike out on those numbers and even though I hear that Tiger’s knee is under construction, the money continues to flow into our agriculture, infrastructure, coals, Nat.Gas, Utes and rails. But I’m not ready to trust this tech rally yet. Yes, we are making money in RIMM and AAPL, etc. but that ($NDX) Nazz 100 move today was more on IBM pin action and I want to see more follow through before I get on the NASDAQ train.

I’ve said Nat.Gas would get to $10.50 and it almost made it today. If you have no Nat.Gas exposure take a look at UNG. It’s the pure play and the chart looks like it just broke out above resistance. If it moves higher think about getting in on a sustained move that stays above the $50 resistance level. I’d buy in stages and put in a stop just under 48 and another at the 50 day MA around 45.50.