Thoughts

Piper (Gene Munster) is saying that an Apple recall is unlikely.

The last time S&P futures gapped up 1% after five straight up days was September 2006.

According to Jason Goepfert at sentimenTrader, the last time S&P futures gapped up 1% after five straight up days was September 2006.

There were two other times in history (March 2003 and September 1996) that this phenomenon occurred.

Both dates marked the launch of bull markets.

Three reasons for a rally -

Retail investors are uninvolved and will likely redeploy cash into the equity market.

Hedge funds have de-risked and will be forced to re-risk on any sustained advance.

If bonds start to falter, a huge asset allocation trade into equities could ensue.

Again:

1. Retail investors are uninvolved. Inflows into domestic equity mutual funds have been nonexistent for an extended period of time. Market tops are usually associated with heavy retail inflows.

2. Hedge funds have de-risked. And they are only modestly exposed to stocks. Further signs of a sustained equity market advance will certainly lead to a re-risking as hedge-hoggers rush to rectify underperformance pressures.

3. If bonds start to falter, a huge asset allocation trade into equities could ensue.

In other words, there are few left to sell and a whole lot of potential buying interest.....

German investor confidence for the month of June declined to a 15-month low and for the third month in a row. Nevertheless, the DAX is strongly higher this morning, as is the rest of Europe.

It's not the news that counts but it is the manner in which Mr. Market reacts to the news that counts.

Case in point, German investor confidence was announced overnight. In the month of June, it declined to a 15-month low and for the third month in a row.

Nevertheless, the DAX is strongly higher this morning, as is the rest of Europe.

Perhaps, at only 12 times a realistic earnings expectation for the S&P 500 in 2011, the bad news has been fully discounted.