As we said in a premarket note this morning to subscribers, several of our volatility-based indicators flashed buy signals, and after the morning washout, markets rallied back above yesterday’s lows. Today’s signal was good for at least 11 S&P futures points off the open, and we expect to see a bit of positive follow-through next week.
The headline story of 2008 is still holding true: a rally in financial stocks is still a necessary but not a sufficient condition for a broad market rally. Today, the story was speculation about Lehman giving up their remaining decent assets to buyers; the financial sector ETF (XLF) was up 3.6%, with banks ($BKX) up 4.8%. While these sorts of news items are good for a quick boost, nothing is going to change the fact that the U.S. economy (and increasingly, it seems, the global economy) is not fundamentally sound. As Jim Kingsland put it today:
The July lows are almost within clear sight and likely to be retested. Only space aliens with hoards of cash and a book called “To Serve Man – THE SPECIAL WALL ST EXEC RECIPE EDITION” will likely get the market out of this longer term downtrend.
Some tech reading to start your weekend:
- Dvorak can’t find a reason for Google’s new browser to even exist. Fair enough: but our view is that if it gets one – just one! – Internet Explorer 6 user to start using something else, then that’s reason enough.
- Coverage of the unfunny Microsoft/Seinfeld ad abounds, but let’s pile on anyway: what the hell? Jerry shouting “you mean you don’t shower in your dress shoes?!” or whatever would’ve been funny, say, 10 years ago. Maybe.
- Stormpulse is a very cool site for tracking hurricanes. Right now, you can see Hanna, Ike, and Josephine all on the way.
P.S. If you haven’t already, be sure to sign up for a membership spot in our new calendar spreads product, Calendar Options.