The positive momentum continues, with 2-1 advancing to declining stocks. Charles Biderman at Trimtabs.com called to say that mutual funds had $10.4 billion in inflows yesterday, the biggest since Jan 4, 2001. That money was put to work today, for the most part.
The Dow is now 185 points from its historic high.
The worry for the bulls: will cautious earnings commentary slow momentum? That's why FedEx was down today -- they report tomorrow, and they always provide good commentary on the economy. They introduced fiscal 2008 guidance last quarter of $7.00-$7.40. But that was based on an assumption of an improved economy in the fourth quarter -- do they still believe that?
Same with Bear Stearns -- down 3%, while Goldman Sachs was up 2.5%. Both report tomorrow. What gives? (Sse Patti Domm's "Market Insider.")
The classic Goldman mythology is working here. The Street believes that Goldman is more diversified than Bear (true), that Bear may report larger losses on subprime (quite possible), and that with almost 60% of Goldman's revenues coming from trading, the legendary Goldman proprietary trading desk somehow figured out which way the wind was blowing a month before everyone else, and successfully maneuvered around the worst damage -- indeed, may have been partly the CAUSE of the worst damage because they traded aggressively ahead of everyone else.
No one knows -- this is the mythology part. The important thing is the Street thinks it is true. Perception is sometimes more important than the facts.
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