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Rally Set to Resume

Stocks sold off modestly yesterday, but the majority of Monday’s huge gains are locked in.

The following economic events are due today:

8:30 Jobless Claims
10:00 Leading Indicators
10:00 Philly Fed Business Outlook
10:00 Geithner testifies before Subcommittee on Financial Services
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
7:00 PM Fed’s Plosser speaks on the economic outlook
7:00 PM Fed’s Rosengren speaks

None of these items will have an adverse impact on the market because they aren’t important. The huge funds run by smart people have been ignoring jobless claims. That’s because having too much employment isn’t necessarily good for the economy, as written in more detail in my earlier article: Debunking Full Employmentt. A smarter, smaller, and more nimble workforce is better than a bloated, inefficient one.

Yesterday the fed did its usual thing. More talk of ’slow growth’ ‘recession’, etc. Most importantly, the federal funds rates will remain between 0 to 1/4 percent for the foreseeable future:

“The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and anticipates that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period”

http://www.federalreserve.gov/newsevents/press/monetary/20090429a.htm

This passage affirms that no lessons were learned from the supposed mess that Greenspan made. Maybe neocon economics is the best path to prosperity; just keep printing money to make the stock market go up. Deficits don’t matter. That’s why you never fight the fed. I’m exuberant, but rational. I’m optimistic, but not cautiously so. The only ‘lesson’ is that people will not learn lessons.

Charts

This morning the futures are down, but the losses WILL be recovered promptly. Buy the dips:

Goldman Sachs is a buy:

SPX due for yet another breakout as volume and price consolidate: