Watch and learn.

With underwhelming macro news, look at how trading evolves. As the money goes out of large caps it goes into smaller caps. IWM is up and the SPY is down. With CVX blowing up, RIG, SLB and HAL stay aloft to keep the OIH flat. And the QQQs are held flat as well. Will it blow?

Addendum: Can’t go down so might as well take it up. An email asked about the implication of inventories in GDP. Increase in output due to inventories implies that such increases are unlikely to continue forever. These will decline as, when and if people keep buying stuff, which they are doing at 0.8% rate. This barely accounts for population growth.  For the US economy to show actual growth and reduce unemployment, numbers in excess of 3% should print. This is probably what was behind the Fed’s promise to keep rates lower for longer.  But for now, the market doesn’t care. There is also some chatter about a “golden” cross on the S&P.

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