TGIF December 9, 2011

By December 9, 2011 Weekly TGIF

Thank God It’s Friday                         December 9, 2011

Only 14 days until end of the year, yet Wall Street traders are still mesmerized by one chart: The S&P-500 index which tracks the big blue-chip stocks.

When the Federal Reserve Bank directors meet next week, watch for further 2011 gains in both bonds and stocks.  Performance chasing is a driving theme these days as most professional money managers are still playing catch-up, since they are underperforming the big blue-chips in the S&P-500 in this tape.  Au contraire, we are in great shape comfortably ahead of the curve.  We continue to focus on strong positioning because time is flying and so are we. 

It’s boring to observe stocks trading off every word from European officials discussing convoluted treaties and make-shift banking policies.  It is even more tiresome to listen to the Wall Street elves with endless theories of where the market is heading from here. For instance, on each of the last 3 days the S&P-500 has traded above but closed below the 200-day moving average.  According to nameless technical analysts, this phenomenon hasn’t happened since the mid-1980’s.  This indicates we are deep inside a traders’ paradise where charts trump fundamental analysis. This is what the pros are doing. When the fundamentals and technicals conspire to keep the tape over 1,265 or so, there’s going to be a lot of firepower coming in to participate in the breakout. Of such things Santa Claus rallies are made.

By: Jude Bedell