IB Net Payout Yields Model


Today's trading was all about clarity. Though the market started weak and it appeared that the 200EMA was going to become major resistance, all of the troubles in this market seemed to clear up within hours.

First, BP caps the well and stops the oil from gushing into the gulf. This will improve confidence assuming of course it continues to work and passes numerous pressure tests. Second, Congress passed a Financial Regulation bill that lacks true to punishing power to the industry. While not a bullish bill by any means, its at least done and alot less harmful then feared. Third, Goldman Sachs (GS) settled with the SEC on fraud charges. The fine was only $550M which was considerably less then feared. With GS being such a market leader, this settlement will unleash the stock and one of the leaders that has held the market down since mid April.

The clarity on these subjects along with news overnight that China has been successful in slowing down the economy from torrid growth is also encouraging. Material stocks have been very weak of late and they should start to turn around as it becomes more evident that China has been able to engineer a soft landing. Something the Communist Capitalist are very good at these days.

All of this news leads to the other major headline of the day that Dems and President Obama have clearly lost the faith of the public. While people were in favor of healthcare and financial reform, they weren't in favor of just reforms impacting jobs and the economic recovery. If anything Dems have been seen as a major impediment to job growth and hence it appears that the political focus might now actually shift to the economy. Either that or they'll clearly lose power in November.

Both are very bullish for the stock market. Any more job destructive policies will be shot down by every Congressman up fore re-election. Gridlock or pro business legislation are the only options on the table going forward. Why else was the GS settlement finalized at such a low sum? Obama needs GS to start hiring people with their massive profits.

Everything is set up for an explosive rally now that Clarity is on the table. and the Dems out of the way whether now or in November!


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