The Markets Continue to Rock Higher
Oct 6, 2010
Posted by Jody Eisenman | Filed under Uncategorized
Based mainly on assumptions that the worlds’ central banks stand ready to do more to stimulate the recovery, the stock and bond markets continue to move higher. On Monday, the US 2 year treasury rate fell to .403%. What that means is, if you put $100,000 in 2 year treasuries, you will receive the princely sum of $403 per year in interest. Makes you want to run right out and buy them, doesn’t it? In the meantime, the stock market roared to a 2 month high, as the S and P closed at 1160, and Dow Jones nears the 11,000 mark. Many bulls feel this is the “second leg” of the bull market.
I would still be somewhat cautious. Already this morning, we saw Irelands’ debt downgraded to A+, with a negative outlook. In addition, the ADP payroll number shows a drop in employment, which is hardly the data that would portend an economic recovery. Last night, Goldman Sachs analyst analysts stated that the economy would be “fairly bad” or “very bad” over the next six to nine months. The first week of November could be key, as both midterm elections and the Federal Reserves’ next meeting will take place. There has been widespread speculation over “ QE2” (the QE standing for quantitative easing) with the Fed buying bonds to stimulate the economy. Thus, we have conflicting data going forward, which probably means that the market will not make any major moves going forward. However, anything is possible. Good luck trading!
