The Most Impressive Thing About Stocks This Year

jeff saut

Jeff Saut of Raymond James observes…

It’s pretty amazing that the equity markets have rallied in light of the super strong U.S. dollar. That action suggests that stocks are not quite ready for the pullback I have been expecting following last Tuesday’s upside blow off. Still, while the Dow Industrials and Dow Transports have tagged new reaction highs, the SPX and NDX have not. Such divergences always leave me in a cautious mode, especially since we are past the seasonally sweet spot for stocks. At some point we are going to get a profit-taking event, whether it is from last Tuesday’s intraday high (1284.62 SPX) or the 1300 – 1320 overhead resistance zone remains to be seen. Until that pullback occurs there just isn’t a whole lot to do on a trading basis.

Dollar aside, this year has seen spiking rates across the PIIGS, the stock market crash of one of Italy’s biggest banks (UniCredit), threats of Greece leaving the Eurozone, and so on. And yet, markets had a very solid week last week. Furthermore, US banks have been particularly strong, despite, you’d think, being particularly vulnerable to Eurozone shocks.