The S&P 500 e-mini futures (ES M1) are trading higher by 2.75 points to 1331.75 per contract. The major stock market indexes continue to climb and remain on a sixteen trading day rally. The highly followed Dow Jones Industrial Average has climbed by 871.0 points in just three weeks time and is making a new high for the year. The geopolitical events in the world do not seem to matter at this time as the markets seem to rally every single day.
Last night the Asian markets were basically flat across the board so there is not much to report there. The popular and highly followed Shanghai Index (China) has held up exceptionally well since raising interest rates a couple of days ago. So far there have not been any ill effects from that tightening in China to fight off inflation.
The Middle East and North Africa remain in turmoil. Libya, Bahrain, Egypt, Syria, and other nations are receiving less and less attention. However, WTI crude is now trading at $109.00 a barrel and oil remains strong on the charts. The oil price is really all that the stock market cares about and so far it has had very little effect on the major stock markets. Often high oil prices will effect corporate earning in the next quarter, therefore, the negative effect can be felt in about three months. It will be interesting to see how earnings will be reported when Alcoa Inc. (NYSE:AA) kicks off earnings season on April 11, 2011.
The Portuguese have accepted a bailout offer that could be around $130 billion. Spain is now the next nation on the hot seat for a bailout, although they say they do not need it. We have all been down this road before with Greece, Ireland, Portugal, and Spain will be next. Where does the money come from to bail these nations out? Oh, it gets printed. As long as central banks continue to print money at an alarming rate gold and silver can increase as they are the true barometers of money printing and inflation.
The European Central Bank (ECB) raised it’s benchmark interest rate last night by 25 basis points to 1.25 percent. This move higher in rates was expected and is already baked into the market. I do not expect any major reaction from the markets off of this move by the ECB. The U.S. Dollar Index is trading slightly higher by 0.23 cents to $75.73 on the news. However, the U.S. Dollar Index will usually fade and drop once the bell rings at the New York Stock Exchange. When the dollar declines the markets will inflate and trade higher. Same game just a different day.
This morning the weekly jobless claims report was released and it posted a decline in claims by 10,000 to 382,000 jobless claims. The four week average is now down to 389,500 initial weekly jobless claims.
The market is overbought in the short term, however, it continues to defy gravity and seems to climb on a daily basis.