The Market Direction today continued the climb into another record close. Gold surged $24.90 and copper moved up to $3.37 marking their highest level in a month. With so many analysts and hedge funds bailing out of gold there was bound to be a rally. Whether this is a turning point is doubtful. Oil was up to a five week high of $96.62. All of these factors point to investor belief that the US economy is gaining strength and momentum. As well Spain announced that they will not require a bail out and believe they now have their economic house in order. France yesterday announced an end to their austerity measures which were certainly short-lived. So everything appears rosy in Europe, or at least until the next crisis hits.
Tomorrow we have the Weekly Initial Unemployment Insurance Claims which if they are better than expected may push the markets higher although they remain extremely overbought.
Market Direction Closings For May 8 2013
The S&P 500 closed at 1,632.69 up 6.73 points. The Dow closed at 15,105.12 up 48.92 points. The NASDAQ closed at 3,413.27 up 16.64.
Market DirectionTechnical Indicators Chart Not Available
Unfortunately this evening my broker’s charting software is not available as they have had technical difficulties so this evening’s technical indicators are unavailable however I had reviewed the charts at the close of the day and they continued to show overbought.
Market Direction Outlook And Strategy for May 9 2013
Even without the benefit of the market direction technical indicators I can see that the markets are overbought. Today’s just continued yesterday’s push higher and has created a stronger reason for the markets to take a breather here. The overbought condition of stocks must be worked out before the market direction can continue much higher.
Central Bank Rate Cuts Everywhere
Meanwhile South Korea joined the ranks of the global community of interest rate cutters, by slashing their central rate to 2.5 percent from 2.75 percent following Australia’s recent rate cut and that of India. The Japanese quantitative easing program is cutting deep into countries like South Korea, India and Australia not to mention the US and Canada. Toyota Motor Company(TM) announced profits that were almost double the same quarter last year thanks to the devalued Japanese Yen. The move around the world to lower interest rates and pump in liquidity is turning into a game of “lowest currencies” as countries around the globe attempt to outdo one another on currency declines to make their exports cheaper than rivals.
The South Korean won has surged more than 24% against the Yen in just 6 months as a direct result of the quantitative easing by the Bank of Japan. This continual effort to devalue currencies can only work for so long but governments around the world seemed to feel they have no choice but to “play the game” that other countries are engaged in as the currencies war heats up.
Market Direction Outlook For May 9 2013
Investors are continuing to sit on the sidelines and watch the handful continue to push stocks higher. The volume is thin which often can push markets higher than many expect. Most of my capital is committed to naked puts. I had no interest today in selling more puts. Investors remain enthusiastic that this year May will be different. It may be but in the end revenue has to improve next quarter otherwise stocks will have a very hard time staying much higher than where they are presently.
The outlook for tomorrow is for more market weakness from the overbought condition but if the Weekly Initial Unemployment Insurance Claims are very good the market may attempt to shrug off the overbought condition and still push higher. If the figures disappoint the market direction should pull back for most of the day but end up flat.
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