Charts: The S&P 500 closed at 1097, up .41%. With oil up yet again, energy stocks rocked while financials slumped. Technical indicators are bullish. Throughout this rally oil has gone up with stocks. That trend is holding up so far. Oil has broken through the $75 resistance. Oil and non-energy stocks can’t rally together forever.
Fundamentals: During this earnings season investors are punishing companies that report revenue misses, even if the bottom line beats. This is good news and bad news. It’s good because investors have stopped drinking the Kool-Aid; they aren’t blindly shoveling money into stocks regardless of the fundies. The bad news is that the current bull market has been built to some degree on just that sort of bubble mentality and the fundies are good but not great in the short term and horrible in the long term. The price of oil keeps rocking up, another concern.
Geopolitics: Pakistani fighter-bombers increased the bombing tempo in South Waziristan, pounding Taliban training camps, barracks, and homes with a constant barrage. Two mechanized divisions of the Pakistani Army with at least 30,000 troops have assembled at various launch points, surrounding the region in a ring of steel. Tanks and artillery are positioned to attack bad guy strongholds from several different angles. Helicopter gunships are poised to take off. Civilians are streaming out of the region in a torrent. The aura of a gathering storm hangs over the tribal land.
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