US Consumer confidence is high, what’s next?

As you probably know, the US indexes closed ABOVE psychological resistance last night.

The Dow closed at 13005.10; S&P500 closes 1372.18 while the NASDAQ closed 2986.76.

There were 3 economic data released last night;

·         Durable orders at -4.0% vs. -1.4% expected; Durable Orders ex Transportation at -3.2% vs. 0.2% expected. This is very negative

·         Case Shiller 20 city index at -4.0% vs. -3.6% expected. Another weak data.

·         Consumer confidence at 70.8 vs. 62.5.

And the market (preferably) focused on the Consumer confidence data, overshadowing (ignoring) the weak housing and durable orders data!

Huh?? With a strong showing of consumer confidence that leads to global growth and hence global demand for crude oil, oil prices experienced a sharp drop. Huh?? Imo, the oil traders (having a different mindset/analysis) were focusing on durable orders rather than consumer confidence??? It is their analysis, not ours.

In conclusion, the US markets closed on a very positive note as a result of favourable US confidence data and a drop in oil prices (while ignoring the weak data???). What if the US data were strong and the US consumer confidence were weak? Would the US market rise or fall?

Penny for your thoughts; The above shows that the market is exceptionally bullish. The market is ignoring ALL kinds of noises and focuses on favourable data. (Hence explains why I include global investors’ mindset to technical and fundamental analysis.) This could also mean that while today being Feb 29^th, the GDP data, Europe’s 2^nd LTRO, etc the market’s mindset could either head further north or trigger a sell to book profits

What would I do? The very fact is the market is very bullish. There is a lot of uncertainty this week with data coming from US, Europe, China and Japan. Uncertainty is we do NOT know what data is to be announced and how investor’s mindset will react as a result of the data. I would prefer NOT to gamble with uncertainty this time and stay on the sidelines.


Latest update: Wall Street will be listening closely to Federal Reserve Chairman Ben Bernanke over the next two days for any signs of distancing himself from the central bank’s pledge to keep rates at ultra-low levels for up to three years. Bernanke is testifying Wednesday in front of the House Financial Services Committee and Thursday in front of the Senate Banking Committee as part of his semi-annual report to Congress on monetary policy.