There is a lot of bad news out there and plenty of belief that worse is yet to come regarding Euroe, particularly Spain and Greece. Spain’s banking worries are really rising and it will likely have to dump tens of billions into them to prop them up, something that would likely require help from the other European nations. So, it is interesting that the US stock market moved higher Wednesday PM last week, was flat going into a long weekend and was significantly higher today.
Most will blame that on short-covering which is a temporary, short-lived phenomenon. But, if you look at the European markets you can see that the last four trading days have brought a series of higher lows and higher highs. That’s pretty bullish, though just for a short term.
Lows are usually set at a time of pervasive bad news and low confidence. And, this may not be a low of any consequence, just another bump on the way down. But, I want to raise the possiblity.
The S&P 500 index finished up 1.1% today with the Nasdaq and small stocks up more. The emerging market ETF was up 2.3%. Gold finished 1% lower and bonds were up. Natural gas was down 4.5%! I have been waiting for a pullback to add to our small position in natgas. UNG is at $17.3, having gone briefly below $17 today. I think the downside risk is probably $15. This is a long-term buy.