Solid Economic News and No Correction. The Bid Will Strengthen Each Day. Get Long

The market surged after the last FOMC statement and it established a new multi-year high. Traders ran out of catalysts and stocks gradually retreated. Last week, the breakout at SPY $143 was successfully tested and buyers are nibbling. Many analysts have been predicting a 3% correction. Asset Managers are anxious to buy that dip and now they are starting to wonder if it will happen. They don't want to miss a year-end rally and the bid will grow with each passing day. Earnings season begins next week. We've had warnings from the tech sector (mainly PCs) and the transportation sector. Revenues will be light and guidance will be cautious. Normally, this combo would not excite investors. Stock valuations are attractive (forward P/E of 14) and corporate balance sheets have never been stronger. Companies are lean and mean and any future uptick in revenues will go straight to the bottom line. Bond yields are at historic lows and as long as European credit concerns remain low, Asset Managers will rotate out of fixed income and into equities. Spain will formally request aid from the ECB and Greece will get its next bailout payment. China will appoint a new leader and they will provide a tailwind through monetary easing and fiscal spending. These events will hit the market in coming weeks and they will be bullish. The economic releases this week have exceeded estimates (ISM manufacturing, ISM services and ADP). This morning, initial claims came in at 367,000. Employment conditions are stable and tomorrow's Unemployment Report should not dampen spirits. Last night, the market found a new catalyst. Traders had priced in an Obama victory because of his lead in the polls (even Fox News). Focus groups comprised of independent voters favored Romney's responses. This will tighten the race. Romney's "pro-business" record will be good for the market if he can keep the momentum going. Central banks are easing and we are in "risk on" mode. The fiscal cliff won't be an issue for at least a month. I suggested taking long positions earlier this week and you should keep scaling in. Stocks have a full head of steam this morning and I don't believe we will reverse late in the day. Once it's obvious that we won't get the pullback, the market will start to grind higher each day. The earnings won't be fantastic, but they won't spoil the party. Get ready for a new multi-year high in October. . .

Daily Bulletin Continues...