It's just another day in the new financial-bizzaro world where any little piece of data may move the markets. Forget imploding Europe or mounting debt levels, the market "reportedly" went higher on a better than expected ISM Non-Mfg number. You may ask, what the heck is the ISM Non-Mfg number anyways? It's a gauge of new business orders from the Institute for Supply Management. Think of it as the "B list" of economic data reports, akin to the aging celebrity who appears on the late-night cable movie or those on The Apprentice: you're fired! Anyways, the non-manufacturing ISM index edged up to 53.7 in May from 53.5 in April, a touch above economists' forecast. And woo-hoo, we got a small broad market rally because of a surprise 0.2% jump, as opposed to a flat reading from the Betty White of economic data. The real reason for the rally may be just another day of "hope springs eternal." Until Ben or his ECB cronies make any pronouncements, we still have the prospect of LTRO3, or QE3, or some crazy combination of both on the near term economic horizon. No worries it's coming. Trade well and follow the trend, not the so-called "experts." __________ Larry Levin President & Founder - TradingAdvantage
I think this part of your post hits the nail on the head to explain the recent action. I so long for the day when markets are driven by fundamentals not what a bunch of hopelessly conflicted & inept officials do or do not say about what they might or might not do. Yes, I may be waiting some time!
QE3 probably won't have the effect pundits are hoping for. Since everyone is expecting some kind of Fed action, it is fair to say that most players are already pricing a QE move into their activities. If that is the case, when QE does come around, it will be with a fizz rather than a bang.
