While the Dow and S&P are up about 1.20% the market’s internals (advancing vs. declining; volume up vs. volume down) are much stronger. Gains are melting, however, as early short covering moderates. To be more constructive we must wait to see if new equity allocations are being made.
There is certainly a move away from treasuries to more risky stocks. TLT, the treasury ETF is down about 3/4 of a point while TBT, in inverse treasury bond fund, is up about 1 1/2%.
The ADP employment numbers were not encouraging; 697,000 lost jobs last week. Tomorrow’s official, and more accurate Dept of Labor numbers are published before the opening. The threat of these numbers is likely to moderate a huge bullish move in equities.
Especially troubling is GE’s decline. Despite management “painting the tape” with moderate press releases about the finance division’s holdings it is feared GE has a mass of bad, bad assets. Shares are off yet another 11% and may break through $6/share today. Without GE leading the pack a sustained rally is problematic as the company is viewed as symptomatic of our financial malaise.
Blackstone (BX), mentioned earlier in the week as a speculation has advanced more than 30% as shorts cover. Shares may still have legs as Schwarzman declines a salary this year. Poor Baby, wonder how he will make the billion earned in ’07 last. I bought a little on the opening and will probably flip it.
