Testy Tuesday – Drifting Along into the End of the Month

My morning post was lost as I stayed in AC yesterday and had a spot of computer trouble this morning.   Anyway, not much action and I'll certainly catch up in chat today.  Futures pretty flat.  I hope everyone enjoyed yesterday's conference  - it was great getting to meet some of the Members in Person.  Between here and Las Vegas, I've met about 60 of our Members so far and I hope to meet many more of you at future conferences. 

As you can see from the Big Chart – we're actually doing a good job of avoiding those "M" patterns so far but we are mindful of the fact that the Dollar has dropped 1% in the past two sessions so we take the 1% move up with a huge grain of salt.

Of course, there's no reason to think the Yen will get stronger (now 97.42) and push the Dollar even lower and we get a Fed Rate decision tomorrow followed by the ECB's decision on Thursday morning so we'll have to stay tuned to see how those two balance each other out but, most likely, the ECB will lower rates, drop the Euro below $1.30 and that will be supportive of the Dollar and NOT supportive of stocks and commodities – in the short run.

In the long run – as we discussed at the conference, the free money continues to flow but, as Dave Fry notes:  "The bad-news-is-good theme continues as both Personal Income and Spending came in at 0.2% and missed expectations. The Dallas Fed Index plunged to -15 vs 7.4 previously but Pending Home Sales rose to 1.5% vs prior -1%. As to housing data, one would expect spring and summer home sales to increase so this comes as no surprise. "

Data continues to be poor in Europe but stocks rallied on the hopes of more easing from the ECB, a new government in Italy, and even a relaxation of austerity measures. China is taking a more measured view of fiscal policies but stocks rallied there anyway which helped Asia in general. U.S. stocks rallied as more QE/ZIRP keeps bulls stuck on Fed life support as noted in Reuters. Recent inflation data, no matter how you view its authenticity, allows central banks more flexibility to…

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