MAY 19, 2005

As I said in my last post, as long as there were no hedge fund disasters, the market could continue to gather strength. That was the first impetus, as nothing untoward happened over the weekend. Then came the Treasury report on China, putting them on notice to loosen their currency peg or else. Finally the core CPI at 0% was the frosting on the cake. Today so far, it looks like the better than expceted jobless claims are cancelling out the worse than expected Philly Fed index, which has been quite erratic lately. So the S&P sits at resistance near 1190.

The bonds sit near 4% resistance in yield and gold is around $420 support. Also it is not uncommon for stocks to hit their high around options expiration. The point being, that this would be a natural area for consolidation or reveral of current trends. No shocking news seems to be on tap for next week, which also fits the scenario. With this backdrop beware of false breakouts.