Manufactured Rally?

Stocks rallied! Go figure.....Surprised? Why so? Feel good mood was set early on (10 am) when the conference board reported that the Leading Economic Indicator Index was 'stronger than expected' - this complemented the early morning release of more 'better than expected' earnings announcements....Can you say manufactured rally? I mean - for two months they tell us that 1Q earnings will be weak, estimates have come way down, macro data mixed, a weak labor mkt causing Janet to hold our hands....putting a floor underneath any correction.

But beware - yesterday's rally was on very low volumes - mkts around the world closed for the extended Easter Monday holiday....so there was little to no commitment.

With the S&P and Dow - back to near highs - the broader mkt 'feels' better - but both the Nasdaq and Russell are still well below their 50 DMA - remaining in a downtrend. Look - even after the latest 5 day rally - both of these indices have barely taken back 1/3 of the losses suffered - meaning they are still in a bearish trend - while the broader indexes are neutral - above their 50 DMA but below the highs....

Large cap names are outperforming - Transports also helping out - this is seen by some as confirmation of further uptrend....while others worry over the lack of confirming volumes. Narrowing leadership with fewer stocks really participating means internal deterioration - just a reason to be cautious. What will the catalyst be? Will it be anything specific or will bulls just tire of the fight?

I mean - look at what happened to the momo stocks ( biotech, internet & social media names) 3 weeks ago....there was no specific catalyst - there was a realization that prices were out of whack - valuations were flirting with the ridiculous - investors concerned about the economy, earnings and global geo-political concerns just took some money off the table in the outperformers. Some stocks re-priced by 25% - 30% as traders/investors ran for the door for no 'apparent reason'. The Nasdaq came within a hair of that 10% correction - only to be rescued by Janet.

Remember - as much as so many 'expect' an adjustment - the mkt has a way of surprising us....that elusive 10% correction that has been the chatter of late is probably not in the cards - at least for now because any substantial deterioration will have the FED pounding the pavement telling investors not to worry. And we know what happens when the FED or any other central banker promises more candy - the correlation between stimulation and gains in the mkt is close to 90%...so for all of those strategists that suggest the mkt is trading here on fundamentals - I say - then let the FED step away, let rates normalize and let the mkt decide what valuations should be - my sense is we would not be trading at the highs.

That being said - that is not the situation we are in - so expect to hear more good news today.....earnings from a host of names: LMT, MCD, RF BK, XRX, ITW, ATT, DFS to name but a few. Eco data includes the Richmond Fed Survey exp of 2 and Existing home sales of 4.56 mil....but remember - no one is paying attention to home sales any longer....makes no difference....because if they are strong then its good and if they are weak - then its good too....(supports Janet's cause)...so either way - It's GOOD.

Last night we saw NFLX 'blow the roof off the house' - stock rallied 7% ($25) in after hrs trading.....recall though that this stock was off 31% ($142) in the past 3 weeks....when the momo stocks got punished....so a 7% rally is relief .....will they take it right back to the highs of $450?

The FED meets in 10 days....so it is hard to see investors really wanting to load up on stocks right now....unless they expect Janet to change course and halt the tapering - which I do not see - because the macro data is improving and earnings are beating estimates...so how will she justify? Unemployment is still too high - so there is the disconnect right? Is the economy really improving or is it stuck? With May only a week away - will we see the "Sell in May and Go Away" mentality take hold?

A failure to take out the March highs on the S&P (1885) will set us up a lower right shoulder in a ' head-and-shoulder formation' - a technical formation that is typically bearish - so traders and technicians will be watching closely as this will be just one technical indicator flashing a warning sign.

US Futures are flat right now as we prepare for the onslaught of earnings from 30 companies today....AGN will surely be the talk of the M&A world as Bill Ackman and Valeant have teamed up to propose a merger...AGN surged 20% in post mkt trading yesterday. S&P remains in the 1850/1885 trading range....as investors await the next move. It will be all about earnings for the rest of the week. Russia and Ukraine are the only external issues that could derail the attempt to move to new highs.

Overnight in Asia - mkts all back online after the holiday.... Geo-political tensions over Ukraine taking center stage. Trouble brewing between China and Japan as the Chinese seized a Japanese cargo ship over legal claims related to WW II escalating tensions between the two countries. WW II? That is what they tell us....Japan threw a 'flag on the play' warning it could have a “chilling effect on all Japanese companies doing business in China”. In Thailand a political crisis is on the brink of being even more dangerous as the prime minister’s opponents press for a “judicial coup” that critics claim risks tipping the country into dictatorship or even civil war. Supporters of Yingluck Shinawatra have vowed to 'rise up to defend her' if the country’s legal institutions eject her from office. Japan -0.85%, Hong Kong - 0.13%, China +0.34% and ASX +0.46%.

In Europe today - mkts are enjoying a rally - the recently announced news that Novartis will acquire the oncology products division from GSK are giving the healthcare sector a boost. Speculation that PFE will launch a bid for Astra Zeneca is also the talk of the day. This would be a major drug deal creating the world's largest medical company becoming a catalyst for other such deals. FTSE +1%, CAC 40 + 0.84%, DAX +1.5% EUROSTOXX +1%, SPAIN+0.8% and Italy +0.8%

Pasta Piselli

This is a peasant dish (one of my favorites) - hails from Naples and has roots that date back to the Greco -Roman period - 50 BC to 300 AD. This period and the resulting cuisine was enriched by centuries of influence of the many different cultures that at one time or another controlled the Neapolitan region. Much of the cuisine took on the traditions of Campania (countryside) and many of these dishes were created around very rural but healthy ingredients - pasta and a host of vegetables & cheeses.... - So today I bring you Pasta and Peas - simple, rural, but go to any fancy Italian Restaurant and you will not pay peasant prices....enjoy - To make this at home should cost you no more than $15 to feed a family of 4.

Slice a large onion and sauté in oil......when soft - 5 mins or so....add one bag of frozen peas and stir to coat....add s&p and lower heat to med low and cover. Cook for 20 mins....stirring occasionally. Check for doneness. they should be soft and juicy....

Bring a pot of salted water to a rolling boil and add 1 lb of med shells. Cook for 8 / 10 mins or until aldente.
Strain pasta - always reserving one mugful of pasta water.

Return pasta to pot and add back almost half the water to re-moisten the pasta.....Do not make it wet....just moist. Add in the peas/onions/oil and 2 handfuls of grated Locatelli Romano cheese - stir and serve. Simple, easy, and only two pots to clean.


Buon Appetito.