Daily Investment Interpretations

May 12, 2011

2011-5-12 (Thursday Night): The dollar fell and the markets rose today, after initially falling on less-than-stellar economic news: Business Inventories Rise in March, Bloomberg Consumer Confidence Index Falls, Producer Price Index Comes In Hotter Than Expected, Retail Sales Up +0.5% in April But Below Consensus, Weekly Jobless Claims Pull Back But Still Above 400K, Eurozone Industrial Production Below Expectations in March, and China Continues to Tighten; Increases Bank Reserve Requirement. The NASDAQ Composite added 26.83 points (0,63%) to close at 2,863.04. The Dow gained 65.89 points (0.52%) to close at 12,695.92, while the S&P 500 advanced 6.57 points (0.49%) to close at: 1,348.65. Oil dropped to $98.14; Gold declined to $1,5104 The VIX slipp 0.92 to 16.03. 
    David Moenning reiterates yesterday's explanation that the market indices are inversely tied to the strength of the dollar: Once More For Emphasis
    To me, the day's most important news is buried in this article: Investor Spotlight: When John Paulson Talks, People Listen. Mr. Paulson is the president and founder of the hedge fund that bears his name, and is a legend in the hedge fund industry. He foresees a rise of about 34% from here, presumably over the next two or three years. That would take the S&P 500 from its current level of about 1,350 to 1,800. Direxion's large-cap bull 3X ETF, BGU, should approximately double from here. For example, in the chart below, the Dow Jones Index

increased about 32% by April, 2010, while BGU was up a little more than 100% at that same  time.
    Michael Ashbaugh has published an article analyzing today's price action:Dollar strength sends S&P back to the range.
    The commodity sell-off: What’s next?  
    Tomi Kilgore writes: Equities finally seeing light on the economy.  
    Chuck Jaffe has written: Inflation diet: same price, less product, and Peter Brimelow tells of Two hard-asset letters still confident.
    Market futures are down a bit tonight.