Dow Trannies Surge Cause Markets to Explode Higher

Markets EXPLODE to the upside!  Dow Transports (Trannies) finally catch up to Dow Industrials - confirming DOW Theory (for those who subscribe to that thought). 
 
Expectations of continued stimulus out of the ECB ( European Central Bank) sent the message that Uncle Mario will not abandon the zone and will continue with his 80 bil/month Euro bond buying program - lent further support to this global feel good mood. 
 
Calm swept over Italy as the expected implosion of the banks does not seem to be in the cards....RUMORS (propagated by La Stampa)  that Italy has requested a 15 Bil Euro loan from the ESM (European Stability Mechanism) to 'prop up' the struggling banking sector sent investors into a frenzy as money poured into the Italian banking sector -  The poster child:  Monti Dei Paschi  surging by 9% as investors are betting that the Italians would not allow their storied banks to circle the drain.....It should be noted that this morning there are a range of news sources (Reuters, CNBC, Euronews) DENYING the story published by La Stampa - but where there is smoke there IS fire... just sayin.....
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European mkts went into 'RISK ON' mode and US investors were not going to be left out in the cold.......mkts started out strong and then exploded as the day wore on.... continued talk of rising rates next week and at least 2 more hikes in 2017 causing investors to barrel out of the gate and go on a BUYING SPREE.
 
As the mkt continued its surge into unchartered territory the euphoria and excitement kept building causing all this internal excitement and confusion in your head.....Hormones were raging and that tingle down your spine was unexplainable but you liked it.....The action left us to wonder - Would the Dow Transports join the party? 

Asset managers/traders/investors all jumping in with both feet as they are reminded of their 'first time'!   Smart logic risk management technology models preparing for 'the moment of no return' when the trannies would bust up and thru their December 2014 high of 9217! 
 
And then at 11:39 am it happened -  the Trannies kissed the old time high good-bye and investors were no longer left wondering what it was all about - it happened!  Just like that!  Dow Theory was confirmed - the Transports were now officially in bed with the industrials and they liked how it felt.....

Asset Management Risk Models sending waves of BUY orders like a recurring tidal wave into the mktplace helped to push that index up by another 163 pts while it pushed the Dow Industrials up by 300 pts and the S&P up by 30 pts!  The 10 exchanges and 50+ dark pools exploded in excitement as computerized BUY programs kept coming causing buying to beget more buying and new highs to beget even newer highs!  Everything (except - Healthcare - XLV, Biotechs - IBB, and Drugs - DRG) benefitted from the automated allocation of new dollars into equities.....The bond mkt once again taking it on the chin as investors moved money out of treasuries and into equities.....(During the past 3 weeks - the equity mkts have added nearly $2.7 TRIL of value while the bond mkt has decreased by nearly the like amount.)   All of this driven by the 'Anti-Establishment' vote seen around the world, the expectation of renewed economic growth, deregulation and reform of the US tax code.  
 
Which now brings us to DOW THEORY......this is a classic valuation theory created (invented) by Charles Dow between 1900 - 1902.  Theory says that:
 
If the stock market as a whole is a discounting mechanism and is a reliable measure of overall business conditions for the economy  - then if we analyze the  market (as defined by the Dow Industrials and the Dow Transports*)  we could accurately gauge the health of the economy and identify the direction of major market trends.   So when both of these indexes are surging and BOTH are making NEW highs - then the thinking is that goods are being produced AND shipped around the country (and world) and that is healthy and bullish - so then 'life is good!' And BOOM!  It's off to the races!  
 
*This made sense because the original Dow Industrials and the original Dow Rail Index (now the Dow Transports) were considered an accurate predictor of business conditions in the country - because those indexes covered the two major economic segments of the economy - Industrial companies that produced goods and the rails that shipped the goods.  (Today goods get shipped via, planes, trucks, ships and rails - thus the index is now called the 'Transportation Index' as it reflects all transportation)
 
Now - while the Dow Industrials have been surging almost daily making new highs - the Dow Trannies were lagging -so NOT confirming classic Dow Theory - until yesterday...when the Trannies EXPLODED up and thru the Dec 2014 all time high.... Now Charles Dow was adamant - the indexes MUST confirm each other for the theory to work and volume must also increase when moving in the primary trend (in this case UP). 
 
This morning mkts around the globe are all in Risk On mode.....Asian mkts reacting to yesterday's US action and European mkts are awaiting the ECB announcement..... expectations are for a 6 month extension of the current QE program (80 bln € per month).  Anything greater than that in duration will be “dovish” (stimulative)  while anything less (in duration or amount) will be “hawkish.”  Will he use the word 'Taper' and if he does how will mkts react? 

The ECB Decision will come at 7:45 a.m. EST and the Press Conference starts at 8:30 a.m.  EST.  FTSE +0.35%, CAC 40 + 0.31%, DAX + 0.42%, EUROSTOXX + 0.38%, SPAIN +1.08% and ITALY +0.67%.  
 
US futures are now flat as we await the ECB news..... Eco data today includes:  Init Jobless Claims of 257k, Cont Claims of 2.048 mil - neither one is going to make a difference at all.....the focus will be on the ECB and then any resulting implications for the FED next week.  A hike is all but assured and 2 more in 2017 are priced in.  If Janet gets a bit more hawkish - by suggesting 3 or 4 hikes in 2017 - then I think the mkt will pause as it considers her language.....
 

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Bay Scallops in Black Truffle Cream Sauce 

Feast of the 7 Fishes - #3 

For this you need:  Bay scallops (the little ones), olive oil, butter, heavy cream, white wine, shallots, garlic, black truffle, white truffle oil, s&p, Brussels sprout leaves and fresh grated Parmegiana and Medium Shells (optional)

Ok – you can make this dish in 15 mins…..Put a pot of salted water to boil.

In a large sauté pan – begin with a ½ stick of butter and a splash of olive oil – turn up the heat to med.  Now add in the sliced shallots and chopped garlic…sauté in the pan for 5 – 8 mins….now – turn up the heat and add in the rinsed bay scallops – you want to sear them quickly. 

If you are serving over pasta - Add the pasta to the boiling water – stir. 

Next – once the scallops are seared – turn the heat down to med and deglaze the pan with some white wine – allow it to steam off a bit – now add the heavy cream and shaved black truffle.  Stir well.  Now add in the white truffle oil – this is key – you DO NOT need much – it is very potent…add – mix, taste.  If you need a bit more then do so…but go easy – do not overpower.

Now take the leaves of the Brussels sprouts (cut the bottom and the leaves fall off) and add to the pan – this will give a nice contrast in color.  Season with s&p.

Taste the pasta – should be almost aldente….strain – reserving a mugful of the water.  Add the pasta shells directly to the sauté pan – pour about ½ of the pasta water in the pan and mix well…..Taste and adjust if necessary.  Next add a handful of the cheese and mix. You will notice that the shells capture the scallop and some of the cream sauce….perfect. 
Serve immediately.  Enjoy with your favorite white wine. 

 
Buon Appetito.