Stocks bounced back from Thursday's loss to put the
(INDEXSP:.INX) back up to yet another new record at 1667.
While the major indices were only up modestly throughout the day,
we saw a big acceleration in the last hour of trading, with the
star of the day being the the small-cap
(INDEXRUSSELL:RUT), which nearly pierced the widely watched 1000
level. Additionally, US Treasuries pulled back following
yesterday's pop, implying that there is still a possible rotation
trade from bonds to stocks, which may be contributing to the
market's astounding momentum in 2013.
In fact, according to Minyanville's technical analysis maven
Dow Jones Industrial Average's
(INDEXDJX:.DJI) current run is the longest one without a three-day
pullback in over a hundred years.
Today's positive action was likely boosted by two pieces of
economic data. The May University of Michigan Sentiment Survey came
in at 83.7, which was ahead of the 77.9 consensus. And within that
report, expectations regarding the economic conditions and outlook
showed marked improvement.
However, it is worth noting that stocks and consumer sentiment
readings tend to have a positive correlation, so if sentiment is
peaking, stocks could be as well. This, of course, must be tempered
with the aforementioned momentum, as we've seen stocks blow right
through bad numbers this year, with just one example being the
lackluster jobs numbers reported onApril 5 .
And speaking of bad data, the market wasn't exactly set up for
great things ahead of today's solid economic numbers, as we saw
some pretty poor earnings numbers yesterday afternoon from
Tomorrow's Financial Outlook
Looking forward to next week, the economic calendar is empty
untilMay 22 , when we'll see the April Existing Home Sales numbers,
not to mention FOMC minutes and testimony from Fed Chairman Ben
Until then, we should see some serious debate about
the rumored tapering of the Fed's QE
, and whether the issue will be addressedon Wednesday .
Additionally, the Fed has publicly expressed an increasing concern
over asset bubbles this year, which some are regarding as a
significant departure from the Fed's normal focus on its dual
mandate of price stability and employment maximization.
As for the near-term outlook for equities, that's increasingly
tough to gauge, and it is perhaps even fruitless to try, given that
momentum has taken over, and it's incredibly tough to determine
when it will end.
But whether this is the top or not, we're certainly going to have
an interesting ride.