It is Not About the Stress Test or the Employment Report
In our evaluation the stock market has reached a valuation and chart objective. Fundamentally what we have been seeing is what may be termed a base building stage of the economy. The banks are getting solidified at a lower base and employment losses are easing. In stock market terms the actions by government have kept the market from making new lows at S&P 440.
As we said earlier this week, now the economic efforts need to go beyond based building and something needs to be built beyond what agriculture is adding to the mix. Farmers are planting but the truth is that the excesses of the past have the rest of the economy in a situation where we don’t need new cars or houses to be built for at least a year. Growth will have to come from somewhere else and it will have to be in the alternative energy build-out. The problem with this is that it is long-term project that is going to require government leadership. Short-term private thinkers are not going to enter this arena because they can see that oil is not going higher, oil will be stuck in the 30 to 60 area for a long-time, so no quick profits are in the mix.
Bottom line is that the economy will need more stimulus and that is not going to happen until congress gets scared again. What can do that, try $ 600 gold and 750 S&P and talk of making new lows, they will then get back into stimulus mode.
The EMA ETF Fund NAV was 1160 at the close yesterday.
7:57 AM CDT