UPDATE ON THE STOCK MARKET. Wednesday, February 27th, 2008
We’re back to three days up in row, hoping today proves to be another up day, the fourth in a sequence, triggering Trader Vic’s bullish 4-Day Rule. In spite of more bad economic data yesterday morning, like twice the expected producer price inflation results and diving consumer confidence. Remember we had posted three straight up days in the major indices two weeks back on Wednesday, February 13th but couldn’t get that four in a row up sequence on Valentine’s Day. And stocks fell back afterward. Four days in a row up generally shows increased institutional confidence and has a good track record, not perfect, of calling a change of intermediate term trend. So let’s hope that Federal Reserve Chairman Ben Bernanke’s talk today gives the market a boost. This morning economic release, worse than expected Durable Goods orders, with or without transportation added in, sure didn’t!
The Boost. We’ve coming in to today, attempting to use the good news that the two key muni bond insurance companies, MBIA and Ambac, kept their triple A ratings, trying to keep this nascent, oh so modest rally, so far, alive. In my view, the most recent crisis involving muni bond insurers is just one of many problems financial markets are going to have to face over the next couple of years. Hopefully, the market’s recent collective sigh of relief by institutional muni bond holders, is enough to keep the stock market rallying, at least for the next few weeks and maybe to the normal full extent of secondary rallies, upwards of three months or until late April. As I recall that was my prediction a few weeks back.