Barron’s picks up “Short-Term Pop?”

August 21, 2006 2:35pm by Barry Ritholtz

Last Week’s RR&A Market Letter was picked up over the weekend by the print edition of Barron’s; Here’s what they ran in the MARKET WATCH section:

Short-Term Pop
RR&A Market Letter
Ritholtz Research &
Analytics
230 Park Ave., New York, N.Y. 10169

Aug. 16: The past quarter’s data show raw materials rose at an annualized rate of 43%. You read that correctly.

So where does that leave us today?

The consumer-price index today showed more inflation than yesterday’s producer-price-index headline; but the core (inflation ex-inflation) was a little light. We prefer to rely on the trend, rather than the outliers, and this number broke the trend of four-straight higher CPI numbers. Since the market chose to ignore the actual basis for the dis-inflation yesterday, today’s action may very well be a tell: If the markets rally them anyway, look for owners’ equivalent rent to become the excuse. [The Dow rose 96.86 points Wednesday.]

The reality is that it is an options-expiration week, and traders seem to have higher prices on the collective hive mind….There’s too much pent-up energy, index shorts are too crowded, and we suspect there are too many funds that are underinvested. Thus, we have the makings of a short-term pop, which could last from four days to four weeks. These are the times where data [are] irrelevant-to paraphrase Thin Lizzy, "When the boys want to play, you better let them."

— Barry Ritholtz

Source:
Short-Term Pop
ANITA PELTONEN
MARKET WATCH, A Sampling of Advisory Opinion

Barron’s MONDAY, AUGUST 21, 2006
http://online.barrons.com/article/SB115594229184139923.html

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