Wall Street Sets To Embrace Good News

The background news was mixed as the Empire State Manufacturing Index dropped more than consensus but Fed Governor Lacker said risks to the economy have diminished. Volume was light and the VIX (20.95) index of volatility dropped a bit. Overall, a dull session but dull on the upside. Also stocks did firm up on the close which is a good sign.

The market is settling into the dog days of summer. We stated several months ago that we believed the odds favored the economy would hit its trough about 10 months (the historical average) after its start (Dec/Jan) or by Sept/Oct.

If history repeats itself, a new bull will start four months before the trough or late June - early July. This is all very cute, but the current market action supports our opinion. Cheer for a good close.

Today - good Wall Street Journal news - "Fed mood tilts away from rate increase." And "Obama plans spending boost, possible cut in business tax." The PPI overall was +1.4% vs. consensus +1.0% and the core was +0.2% on consensus. Goldman Sachs (182.09,GS) earnings much better than expected pushed the futures up.

Source: Reported by Alfred E. Goldman, Chief Market Strategist at Wachovia Securities who has been in the business since 1960 as a securities and market analyst, writer, and lecturer on investments.