Quiet Washington Allows Optimism To Prevail!
Thursday, January 10, 9:25 a.m. It’s interesting how the lack of panicked meetings and ugly headlines out of Washington has allowed the new year to begin with a period when investors can focus on more normal things, like the continuing evidence that the economic recovery is back on track, and fairly good 4th quarter earnings [...]

Thursday, January 10, 9:25 a.m.

It’s interesting how the lack of panicked meetings and ugly headlines out of Washington has allowed the new year to begin with a period when investors can focus on more normal things, like the continuing evidence that the economic recovery is back on track, and fairly good 4th quarter earnings reports.

Without the ugly political environment dominating thinking, investors seem to like what they see, having become quite optimistic again.

This week’s poll of its members by the American Association of Individual Investors showed a big jump in bullishness and drop in bearishness. The bullish percentage jumped to 46.4% from the previous week’s 38.7%. The bearish percentage fell to 26.9% from the previous week’s 36.2%.

And the plunge to a five-year low by the VIX Index (aka the Fear Index) over the last few days is so dramatic it’s making headlines.

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If only the political atmosphere could remain quiet.

But how long before the storm of publicly-laundered political ugliness of uncertainties returns in arguments over raising the debt ceiling, the unresolved fiscal issues that were only kicked down the road to February, and confirmation battles over the President’s choices for Secretary of State, Treasury Secretary, etc.

Speaking of Investor Sentiment..

There’s been an interesting development in the area of measuring investor sentiment.

TD Ameritrade introduced a new sentiment indicator yesterday that could eventually become a better measurement of retail investor sentiment than current methods. TD Ameritrade will measure the risk appetite of its 6 million customers based on their actual trades during each month, using a proprietary formula that will score the riskiness of new positions taken during the month.

The company says it will take some months to fine-tune the methodologies, and then some time for readings to take on meaning as to what constitutes high or low extremes of bullishness or bearishness.

It has the potential to become a better method than current sentiment indexes, most of which are based on surveys. And as we know some people claim to be bullish or bearish but their actual holdings or exposure don’t reflect that sentiment.

And those indexes that are based on actual positioning like the VIX Index, are heavily influenced by institutional investors and professional traders.

To read my newspaper column from last weekend click here: The Bond Sell-Off is Due to Become More Serious!

Subscribers to Street Smart Report: The Mid-Week U.S. Market update from yesterday, an in-depth ‘Global Market’ update from Tuesday, and an in-depth ‘Gold, Bonds, Dollar, Commodities’ update from Monday, are in your secure area of the Street Smart Report website .

Yesterday in the U.S. Market.

After the biggest weekly rally since 2007 last week, the market was short-term overbought, but was down only 2 days, and only fractionally, and then bounce back yesterday. Trading volume was almost 0.7 billion shares traded on the NYSE.

The Dow closed up 61 points, or 0.5%. The S&P 500 closed up 0.3%. The NYSE Composite closed up 0.4%. The Nasdaq closed up 0.4%. The Nasdaq 100 closed up 0.3%. The Russell 2000 closed up 0.6%. The DJ Transportation Avg. closed up 1.0%. The DJ Utilities Avg closed down 0.3%.

Gold closed down $5 an ounce at $1,658.

Oil closed down $0.02 a barrel at $93.13.

The U.S. dollar etf UUP closed up 0.3%.

The U.S. Treasury bond etf TLT closed down 0.1%.

Yesterday in European Markets.

European markets closed up yesterday. The Europe Dow closed up 0.6%. Among individual countries, the London FTSE closed up 0.7%. The German DAX closed up 0.3%. France’s CAC closed up 0.3%. Greece closed up 0.4%. Ireland closed down 0.3%. Italy closed up 2.2%. Spain closed up 1.8%. Russia closed up 1.0%.

Asian Markets were mixed Tuesday night but up last night.

The Asia Dow closed down 0.2% Sunday night, but up 0.8% last night.

Among individual markets last night:

Australia closed up 0.3%. China closed up 0.4%. Hong Kong closed up 0.6%. India closed unchanged. Indonesia closed down 1.0%. Japan closed up 0.7%. Malaysia closed down 0.3%. New Zealand closed up 0.4%. South Korea closed up 0.7%. Singapore closed up 0.2%. Taiwan closed up 0.9%. Thailand closed down 1.2%.

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Markets This Morning:

European markets are up this morning. The Europe Dow is up 1.4%. Among individual markets, the London FTSE is up 0.2%. The German DAX is up 0.5%. France’s CAC is up 0.1%. Spain is up 0.1%. Greece is down 1.0%. Italy is up 1.0%. Russia down 0.5%.

Oil is up $1.04 a barrel at $94.13.

Gold is up $12 an ounce at $1,670.

This Morning in the U.S. Market:

This week is a very quiet week for potential market-moving economic reports, almost none. To see the full list click here, and look at the left side of the page it takes you to.

There were no reports Monday.

Tuesday’s only report was that NFIB Small Business Optimism Index rose 0.5 in December to 88.0 from November’s worst reading since March, 2010, and a level that the NFIB says is at recession levels.

There were no reports yesterday.

This morning’s only report is that new weekly unemployment claims rose by 4,000 last week to 371,000, while claims for two weeks ago were revised down by 5,000 to 367,000 from the original report of 372,000. The four-week moving average, which smooths out the weekly volatility in the numbers, rose by 6,750 to 365,750.

Our Pre-Open Indicators:

Our pre-open indicators are pointing to the Dow being up 60 points or so in the early going this morning.

To read my newspaper column from last weekend click here: The Bond Sell-Off is Due to Become More Serious!

Subscribers to Street Smart Report: The Mid-Week U.S. Market update from yesterday, an in-depth ‘Global Market’ update from Tuesday, and an in-depth ‘Gold, Bonds, Dollar, Commodities’ update from Monday, are in your secure area of the Street Smart Report .

I’ll be back with the next regular blog post on Saturday morning, as usual later than on weekdays, probably around 11:00 a..m.

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