The Market is up, Unemployment claims are up, and the GDP is down!

After being higher as much as 50 Dow points overnight, the market opened flat, and at this time the Dow is trading up 16, the SPX is up 0.92  and the Transports are up 51, or 0.93%.  The trannies are especially strong, as the Dow and the SPX are only up 0.10%  Most of the major indexes made new recovery highs yesterday, after breaking the neck line of the well reported Inverse Head and Shoulders patterns that occurred in most indexes, and also broke through the existing resistance lines.  The only caveat is there appears to be little enthusiasm on the part of the Bulls, as volume continue to lag.  I continue to look for a correction and a test of the break out, my outlook supported by continued negative divergences in the RSI and MACD in all of the shorter term charts for the Q's, the SPY and the DIA
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The two big reports today are the 1st quarter GDP estimates and the weekly new jobless claims.  The GDP estimate printed at 1.8%, down from the 4% consensus just a month ago.  All sectors were lower, and if not for the inventory buildup, the print would have been 0.8%  New jobless claims for the week printed at 429,000 vs estimates at 395,000 and last weeks revised 403,000.  Not the kind of reporting that would convince anyone the economy is improving... and considering the GDP deflator is constructed without considering things like energy and food, it appears the double dip will appear this Summer or early Fall.

Oil is higher at 113.94 and Brent higher at 122.97.  Gold is trading at new highs, 1535.90 as is Silver, trading at 49.34.  The 10 year Note is 3/8 higher, trading 3.314% and the long Bond is 1/2 higher, trading 4.427%.

The reason for all of the above pricing is found entirely in the FX market.  The Euro is 1.479 and the Dollar, after trading below 73 overnight, is currently 73.21.  The declining Dollar is the reason the PM's are higher, the reason the equities markets are higher, and the symbol of the failed policies of the Fed.  We are at the point where the choices facing the Fed are all negative.  If the Fed continues the QE programs and the ZIRP, the Dollar decline only accelerates.  If the Fed raises interest rates, the Dollar rallies and the economy tanks.  If the Fed does nothing, the economy collapses without the QE stimulus and the Dollar likely rallies with out raising the discount rate.  Of course, at the point, we are looking at negative real rates..

Not that anything I said in the previous paragraph has anything to do with the market.  The market and the real world have been disconnected for some time.....the only question is when will the markets respond to the real world?  I will offer an answer... we will see it as the Momentum Changes indicators generate the next Sell signal.

Best to Your Trading!

Bill