By Nicholas Santiago on March 18th, 2010 1:14pm Eastern Time
What can one say about the markets when they just don't seem to fall? The United States has been spending money like a homeless person that just won the lottery. Deficits are now in the trillions of dollars and growing by the minute. The unemployment level in the U.S. is at 9.7 percent according to government standards and around 17 percent from other reports. Then there is the housing crisis that continues to plague the United States. Home foreclosures and now shadow foreclosures are increasing, literally by the minute. Stimulus programs such as home tax credits are everywhere and houses are still falling by the wayside. Banks in the U.S. are still not making loans, however, they are making profits. When you can borrow at nearly zero from the Federal Reserve Bank and buy U.S. Treasuries you can make money even if you are an idiot. Add proprietary trading to that and who needs to lend. Once the mark to market accounting was removed for the banks, the toxic assets no longer needed to appear on a balance sheet. Simply brilliant when you think about it yet just hiding the obvious from the average American.
Then the stock market rallies since March 2009. President Obama tells the country that it is a good time to buy stocks for the long term. The market has rallied ever since that statement. I have to admit, it was due for a bounce at that time and what a bounce it has been. While the volume trends have been extremely poor, you cannot fight the price action. The market floats higher everyday regardless of the news.
Then we have the European Crisis. The Euro Union is in complete disarray. Greece, Spain, Italy, Ireland, Portugal, Lithuania, and possible a few other countries that I'm forgetting are all insolvent. Bailouts are necessary for all of these countries. Then we have England which has its own debt problems that are also soaring. Remember England is independent form the European Union. The British Pound has been getting pounded since mid November. However, the FTSE index (INDEXFTSE:.FTSE) has made new highs for the year.
Then we have China. It has been crowned the leader of economic growth. Can you believe a communist country is leading the world in growth? China now seems more of a capitalist country than the U.S. Don't tell Google Inc (NASDAQ:GOOG) that. China supposedly buys every commodity on the face of the earth and consumes all the energy they can get their hands on. China continues to keep their currency called the Yuan pegged to the U.S. Dollar. Why wouldn't they keep their currency pegged when they hold about a ½ trillion dollars worth of U.S. Treasuries and maybe more.
The moves in the SPDR S&P 500 ETF (NYSE:SPY), SPDR Dow Jones Industrial Average ETF
(NYSE:DIA), PowerShares QQQ Trust, Series 1 ETF (NASDAQ:QQQQ), and iShares Russell 2000 Index ETF (NYSE:IWM) have all been simply amazing over the past year. This is wild action in the wild west. When the volume is this light it can continue to float higher.
Nicholas Santiago
Chief Market Strategist
InTheMoneyStocks.com
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