Daily Investment Interpretations
May 12, 2011
(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
at 2,863.04. The Dow gained 65.89
to close at 12,695.92, while the S&P 500 advanced
to close at: 1,348.65. Oil dropped to $98.14;
Gold declined to $1,5104
The VIX slipp 0.92
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.