After hearing that the producer prices surged well past inflation expectations, the bulls ignored the news and pushed the SP-500 to its 47th record high for the year, with Dow leading the charge. I suspect there will be a time when we will suddenly care about inflation, but for now, stick with the bullish trends and enjoy the party as long as it lasts. With volume below average and a very week, Absolute Breadth Index may suggest market complacency is growing, so guard against overtrading and avoid chasing already extend stocks.
Asian markets struggled overnight, closing the session mostly lower with only ASX squeaking out a positive close. However, the Europiean markets see nothing but green this morning fueled on solid earnings data. With earnings numbers dwindling and U.S. futures trade mixed ahead import/export numbers and consumer sentiment.
Economic Calendar
Earnings Calendar
We have a lighter day on the Friday earnings calendar with just 71 companies listed, but a significant number are unconfirmed. Notable reports include ARHVF, DSEY, FUJIY, SDPI, & VSTA.
New & Technicals’
The pandemic numbers back on the rise; the FDA recommends booster shots for people with compromised immune systems hoping to shield the most vulnerable. According to Fauci, everyone will likely need booster shots in the near future. In addition, pandemic restrictions are again on the rise, with indoor masking requirements and vaccine passports entering public buildings. A new black market business has emerged producing fake vaccination cards. As the U.S. withdraws troops, Al-Qaeda quickly regains power as they march across the country, taking city after city. The expectation is that Kabul will soon be recaptured, and the U.S. is now deploying 3000 American troops to help with the evacuation of Americans at the U.S. Embassy.
After hearing that Producer Prices came in much hotter than expected, the bulls quickly decided they don’t care, setting the 47th new record high in the SP-500 this year. The Dow also surged to new records while the QQQ recovered from early selling as the tech giants lifted the index. The VIX continues to march lower, nearing the June lows. It is, however, a bit concerning that volume remains below average as the market surges higher and the Absolute Breadth Index remains shocking low. That said, the bullish trends in the DIA, SPY, and QQQ are unmistakable, and the technicals show no signs the direction is about to change. Stay with the trends as long as this bullish party continues, but plan to protect your capital should the sentiment suddenly change.
Trade Wisely,
Doug
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