Wednesday, May 30, 2007

Quick Evening Market Comment

I was in NYC for much of the late afternoon and early evening attending to some important business. My calendar has been jammed packed with activities of late.

I want to thank a donor for New England who kicked a nice donation into the Paypal tip jar today. That is much appreciated. Between subscriptions for publications, even fees to have the S&P ticker up, the site is costing deep five figures to operate.

The Dow managed to close above 13,600 for the first time. While indicators like RSI above 70 may warn of overbought conditions, so long as private equity remains active there is a major floor of support under the market. The market was also able to blow off the latest Shanghai surprise since a one day 6.5% didn't even get the Shanghai market to close beneath its 20 day moving average, and unlike the February China market swoon, this one wasn't accompanied by a flight to yen which suddenly caused an unwinding of carry trades to take the U.S. stock market down hard. The Yen was little changed today.

Latest deal tonight: Ceridian agrees to be sold for $5.3B.

Rumors of deals continue to capture the hearts and minds of speculators. Cleveland Cliffs (CLF) surged $3.52 or more than 3% today on speculation CLF is holding talks to be bought by CVRD (RTP) for around $100 a share. CLF surged another 3% to $84.30 after it got a very favorable mention from Cramer on CNBC this evening. I have been long CLF since last Friday.

GDP revision and jobless claims hit the market at 8:30 tomorrow morning. Manufacturing and construction spending data at 9:45 and 10.

Eventually it will all end badly. When? I have no idea, but I continue to keep a close eye on SPX put and call activity and the volatility index among other indicators. The Washington Post reminds today the housing ATM is broken. That will surely catch up with the consumer at some point.

This would also mean a bad day in the markets - if this were enacted:

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