3/17 Morningline

Blue chip stocks (SPY) gapped up, opening 0.3% above Tuesday's close. The latest high -- $116.92 -- stands 1.5% above the prior high set in January prior to the recent 9.2% correction.

Long-term Treasury bonds (TLT) also gapped up by 0.3%. Tuesday's movers -- gold (GLD) and oil (USO) were trading within the prior day's range.

All in all, a happy market. An exuberant market. A market for all seasons, at least so hope the bulls.

The February producers price index released today fell 0.6%, the biggest decline in seven months. In January the index rose by 1.4%, so the net gain is 0.8%.

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Abbreviations 

psar - Parabolic Stop and Reverse, adx - Average Directional Index, pps - Person's Proprietary Signal, ma20 - 20-day moving average, macd - Moving Average Convergence-Divergence, mfi - Money Flow Index, sto - Fast Stochastic

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The producers price index is the prelude, but the main movement of the piece comes on Thursday, with the released of the consumer price index.

If both indexes remain low, then that means the Fed is unlikely to raise short-term interest soon, which makes stocks more attractive because on average they have greater yields (except when they don't, of course). My question is if the feds have sunk so much money into the economy and the Fed has lowered interest rates to practically zero, why isn't inflation kicking in? Does it means that present recovery is a chimera produced by the brains of deranged economists? Low interest rates are good for stocks, but sluggish business is bad for them. So, where's the middle ground? Not being a deranged economist myself, but merely a crazed trader, I have no idea. I just play the technicals, where ever they might lead. To the numbers, at about 10 a.m. Eastern . . .

New this week, from the author of Liar's Poker, a look inside the Doomsday Machine.

Indicators:

• Blue chip stocks etf (SPY) is trading at $117.04, in psar bull mode with an adx of 24, entered at close on Feb. 11 (at $108.13)
• Fear index or volatility (VIX) 16.61, bear/12 (bullish for stocks), Feb. 17 (21.72)
• Treasury long bonds (TLT) $91.21, bear/12, March 10 ($89.59)
• Corporate junk bonds (JNK) $39.50, bull/26, Feb. 22 ($38.91)
• Emerging markets (EEM) $42.18, bull/19, Feb. 3 ($39.40)
• Gold (GLD) $110.35, bear/11, March 9 ($109.72) Pps bull signal on Tuesday.
• Oil (USO) $40.20, bear/18, March 12, ($39.51) Psar bull signal.

Forex currency pairs:

• Dollars per euro (EUR/USD) $1.3763, bull/21, March 3 ($1.3696)
• Yen per dollar (USD/JPY) ¥90.52, bull/13, March 10 (¥90.51)

Stock option holdings, March expiry:

• AKS, iron condor (p19/-p20/-c25/c26), $23.28, bull/13, March 3 ($22.81)
• WFC, iron condor (p26/-p27/-c29/c30), $30.35, bull/235 Feb. 22 ($28.01)

Dividends:

• AOD, shares, $9.25, bull/28, Feb. 11 ($8.33)
• NLY, shares, $18.63, bull/26, March 16 ($18.60)

Zombies:

• MCO, long shares, $28.77, bull/15, March 5 ($28.11) 
• PALM, long shares, $5.37, bear/45, Feb. 18 ($9.62)
  

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