I noted in the Weekend Wrap-Up that 90% of our gains have come in one day each week.
I also pointed out that a vast majority of those gains occur in very thinly-traded futures, where unregulated (or jokingly regulated) traders can trade a few thousand index shares and move the US market values by Trillions of dollars. That’s why you often see the title "Just Another Manic Monday" starting my weeks, because it is often manic (as in upbeat for irrational reasons) and, as noted by Trader Mark in his post last night – it’s pretty darned ordinary at this point. In fact, anything less than a 1.28% gain on a Monday is below average.
So we are going to be back to testing our breakout levels early in the week and the volume should be low enough to allow a run back to last week’s highs. International traders took advantage of the Nikkei being closed and used the low Asian trading volume to make a statement on the Hang Seng, driving that market up over 200 points after lunch, improving on a 175-point gapped up open that has been flatlining until that final 90 minutes. It was another commodity-led rally as the dollar dove back to 88.5 Yen and right back to $1.4975 to the Euro (where we shorted the Euro last week) and $1.66 to the Pound. This led gold to fresh highs at $1,167 and copper touched $3.20 along with oil getting back to $78.50 – all tempting shorts but we’re happy to watch this nonsense from the sidelines after getting a bit more cashy ahead of the holiday.
The big market-moving news in Asia was a rumor that a researcher under China’s State Council reportedly said the Chinese economy was likely to expand more than 10% in the fourth quarter. That’s all it takes, you know – I know a guy who knows a guy who heard a guy who works in China said things are good there and BOOM – the Dow gains 100 points. Forget the fact that a 10% gain in China’s entire economy is just $400Bn US Dollars – see this excellent NYTimes China/US compariston chart to get a better picture of how the two nations stack up and also please read the excellent article from Marshall Auerback this weekend, "Should America Kowtow to China?" to get a great perspecitve on the money game.