His call for this week (but read the full missive) in very short:
Last week the DJIA and DJTA broke out above their respective 50-day moving averages (DMAs). They also now reside above their 10-DMAs and 30-DMAs. The 34% rally by the Transports since their March 9, 2009 low is particularly interesting given the Trannies’ economic sensitivity; and, amid cries that we are in a Great Depression environment. And don’t look now, but lumber has quietly gained nearly 30% since its February 2009 low. Again, that’s pretty impressive action given the current housing backdrop! Meanwhile, we are watching Personal Consumption Expenditures (PCE), for this is how recessions end. Indeed, if the “real” PCE has stabilized, the end of the recession is not far off. Manifestly, the stock market always turns-up before the economy bottoms. So if the January/February strength in the PCE is for real, it is an extremely positive event. However, if the PCE strength is just a reaction to the +5.8% COLA adjustment, as well as the 13.2% increase in IRS tax refunds year/year, then the upcoming month’s data will revert to a more subdued reading. Accordingly, we are watching the PCE closely. While we are watching, however, our investments in platinum broke out to new reaction “highs” last week, and indices playing to Brazil are attempting to break out to the upside. Still, it is day 16 in the “buying stampede” and we have turned cautious. And, isn’t it interesting how the markets follow the news, for following “Friday’s fall” (-148 DJIA) the Obama Administration warned that some banks will need more government aid and that bankruptcy might be the best option for GM (General Motors/$3.62) and Chrysler.
Consider as a probability!
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