Just so you know how i'm spending my time:

If you hate this stuff you can skip it. Two other newish (unrelated) posts below.

OK, it's the weekend. No trading opportunities. Time to scan the news. The University of Michigan Consumer Confidence Survey yielded higher numbers, important because consumers drive the economy. Also the Department of Labor reported "higher than expected" job creation. Also The Midwest Purchasing Managers' Composite Index, reflecting manufacturing activity, increasing "more than expected." All good indicators for the economy and therefore for the markets. The Fed's take on the news was that maybe things slowed down a little in the first quarter, but we're already rebounding. Of course I'm sceptical, but there it is.

All the index weekly charts continued upward trends. The Dow Jones Industrials June futures contract is up nearly 10% in two months. Reports are that there are a lot of short positions on the NYSE stocks. If the markets keep going up, the bulls say these shorts represent buying demand as the shorts have to be covered.

Another item. From October '81 through June '05 the 30 year bond interest rate declined from 14.68% to 4.29%. Now it's moved up again to 4.9%. The up move seems insignificant relative to the decline, but if long term rates keep rising it will be important. Rising long term rates are bad for the stock market because, at the same time, the higher rates slow consumption, reduce corporate profits, and provide a more attractive alternative to equity investments. Costs associated with baby-boom retirements will insure large and growing deficits, so long term rates should keep rising.

And a side note, trade relations with the Chinese are growing more complicated. When we insist the Chinese strengthen the yuan/renimbi to help American producers, we're asking the Chinese to reduce the worth of their dollar denominated investments - e.g. investments in treasury debt. We'll have to increase yields to maintain Chinese investment at current levels, and raise rates even further to coax additional funding from them. Hey guys, the time to time to cut the import flood was 5 or 6 years ago. (Stayed too late at the party, did we?) Remember that old joke? It's hard to remember you're there to drain the swamp when you're up to your ass in alligators.

Difficulties for markets to deal with in the coming months, but what about Monday? Will the markets be dealing with these issue or will they be reflecting the good news on job growth, consumer confidence and the purchasing managers index? More the latter I think, and the pot will be stirred with rumors of merger and acquisition activity.

So if I were to long an index future which one would it be? The Dow has been almost too strong, and I'm still suspicious that the S&P is struggling at this level. Remember the old low on the S&P was $768 and we wanted to see what happened at double that number. Well, It's Here: the S&P closed at $1536 Friday. The Russell 2000 had a good run last week, and closed trending up on Friday, whereas the NASD100 was weak at the close. Also the Russell is less than 2% over its February high. The Russell trades with less of a daily range, and is less likely to shock me with a quick movement down. The daily volume in this contract is about one third of the outstanding contracts, less than the other indexes. Sounds like more upside with less risk.

Also, I'm still long that mini gold, and that could be OK - I hope. The gold spot market is at 671. "It could go either way from here" As always, but more so. Where should I place my stop loss and where should I plan to double up? I'll ask Mr. Fibbonaci what he thinks.

Hmmm, if the major indexes are falling Monday I should be able to get out of the Russell with a minimal loss and short the S&P mini as alternative strategy. I could get whip-sawed. As they say in the old English movies "Too clever by half."