NEW HIGHS

Well the S&P set a new intraday high today after another big rally on the Fed minutes. The market and earnings tell us in spite of all the potential negatives it's all good. Oil averaged roughly $62 this quarter and another quarter of double digit earnings are unfazed. Bond yields are up 75 basis points and that hasn't been much of an issue either, except for slowing housing a little. The Fed tells us the economy can handle a housing soft landing though. We obviously haven't reached a tipping point yet.

It looked to me like the run to new highs today was to blow out the stops at the 5yr highs and it is not uncommon for highs to be made right around option expiration day, which is tomorrow.
A tipping point is close I believe because even though oil is not at an inflation adjusted high, it is higher on an inflation adjusted basis than anytime but once. And even though the 10yr yield is low by 80's standards, an index of inflation adjusted oil and inflation adjusted 10yr yields I deep has never been higher except for the early 80's. True stocks began their long bull market about then but they were propelled by the Regan massive tax cuts, and the trends in inflation and interest rates were sharply down albeit from much higher levels. Today both are moving higher. Perhaps even more important, back then we were much less leveraged. Total government debt of GDP was half of what it is today and the consumer debt ratios were 20% lower with a savings rate of 10% versus 0% today.

A tipping point could come tomorrow or wait until the dangerous months of Sep and Oct. Obviously the Fed raising rates 15 times has been good for the market as it implies robust fundamentals. It;s when they are thinking of easing that we need to be worried.

WANT TO KNOW WHAT HAPPENED TODAY

Seems as if everyone one on CNBC is perplexed by what happened to the rally today.
Here is what happened. The market opened higher. The S&P traded as high as 1314.07. The five year high was 1315.93 reached the week of 5/25/01 on a spike. Bonds also initially traded higher and then reversed. The high yield on the 10 yr was reached the week of 6/18/04 at 4.88%. When the bonds broke through that ceiling decisively on their way to 4.95% and the S&P at 5 year resistance, you can bet trading models picked that up all over the world and hence program selling began. That doesn't even take into account that the market was ripe for profit taking on weak fundamentals of higher oil prices, and lackluster retail and auto sales.