Fundamentals Look Bad, Markets Don't Care....When will They React?
Attached is our latest video and as I am writing this Friday afternoon, we are breaking above a key resistance. Which would be bullish….. But as you’ll see from my headline, I am still skeptical of this rise. As in the past my concern with this rise upwards, it is with what lies below the surface, low volume, low conviction. But, this is one of those times when no matter the news/data, the markets will rise. But lurking ahead is a projected 0.4% GDP for the 1st Qt and an earnings estimate that will again be cut in half. For the second Qt. in a row. At present I am overall neutral, but see a potential shift to positive with our short and mid-term signal. As a reference: A rally in U.S. equities would suggest that profits will climb, and that typically occurs with a strengthening economy. But a strengthening economy should result in higher treasury yields. Unfortunately, we haven't seen that as the 10 year treasury yield refuses to budge higher. So we continue to get conflicting signals.