Monday Mania Rally but then be careful.
The rally that appeared in the latter half of last week was greatly influenced by February performance gaming. This is evinced by the excruciatingly low volume. Institutions are waiting and watching because the environment is so muddled. But professional traders must play every day. And with diminished liquidity, a few big trades can greatly move a market.
On Sunday night, SPHs are up 34.40 in anticipation of the usual Monday Manic rally, the latest Greek bailout and start-of the month buying. Gold and the dollar are down a tad. Gold is being kept from a larger decline by the 12 handle surge in copper due to the Chilean earthquake.
However, the copper rally could be fleeting because reports say the Chilean copper industry will suffer only minor disruptions.
We look for strength early in the week because traders are likely to lighten up by Thursday on fear that the inclement weather combined with the recent evidence of economic ebbing (tax receipt declines and dismal housing data) could produce a February Employment Report on Friday that might show job losses far in excess of the expected 50k NFP decline.
The Chicago PMI rose to 62.5 from 61.5; 59.7 was expected. The strength in the headline number is not reflected in the subindexes, most of which fell. The key new orders component declined to 62.2 from 66.4. Production, inventories and employment also declined. But the real story is once again seasonal adjusting greatly boosted the index. NSA the Chicago PMI is 57.1. https://www.ism-chicago.org/chapters/ism-ismchicago/files/ISM-C%20February%202010.pdf
So before you invest based on today’s ISM, check to see what the seasonal adjustments and key components are at the ISM web site: http://www.ism.ws/