We had a broad rally, but stocks ended off the highs. That's fine. The big debate is whether or not we are at some kind of inflection point. Is the next big trade "go long techs & financials, short commodities and bonds?" It's too early to tell, but that is where the debate is centered.
There have been some important technical breakouts in the past few days that is fueling this speculation:
Dow, S&P: highs for the month
Banks: highs for the month
Home builders: 6 month highs
Gold: 5 week lows
We need a few more days to sort this out. Specifically, we need to get past the end of the quarter, which may be distorting the trends due to profit-taking and the usual hysteria. Actually, there is a greater hysteria level than usual, due to the fact that both shorts and longs have been decimated this quarter, and many are fearful of significant redemptions once clients see their quarterly returns (S&P down 8.3 percent YTD).
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