Monday, May 7, 2007

No Stopping the Bull: Another New High for Dow

If you've missed the recent stock market explosion, take heart. The new highs will continue to come and stocks are poised to make impressive gains. The US economy - despite some persistent, nagging problems - continues to expand at a measured pace and corporations have never had it so good. This bull is getting a second wind. 15,000 on the Dow by the end of the year is looking more achievable every day.

Dow 13,312.97 +48.35; NASDAQ 2,570.95 -1.20; S&P 500 1,509.48 +3.86; NYSE Composite 9,825.09 +32.09

CNNMoney reports that today's Dow gain matches an 80-year-old record of 24 up sessions in the last 27. The previous run was in the summer of 1927.

While the Dow continues to awe and amaze, the NASDAQ dropped a little more than a point, though the S&P 500 moved to within 18 points of its all-time closing high. Once again, the if the S&P manages a new high, it could spark a significant break out, leading all indices higher.

The markets were buoyed by a confluence of forces today including Warren Buffet's suggestion that his Berkshire-Hathaway conglomerate would be pursuing an acquisition in the $40-60 billion range.
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Speculation on what Buffett will be buying ranges from the outrageous (think Yahoo or Adobe Systems) to the marginally feasible - like Dow components Caterpillar (CAT), DuPont (DD) or McDonald's (MCD) - each of which are within his market cap range.

Alcoa (AA) management announced that it would be pursuing rival Alcan (AL) via a hostile bid. Both stocks were sharply higher, with Alcan gaining more than 21 points at the close - a nearly 35% increase - to 82.11.

Oil fell for the 6th straight session, a run of losses which has drivers cheering. The price of crude on the NY Mercantile Exchange fell 46 cents to $61.47. The losing streak was the longest in more than 7 months.

Advancers and decliners were nearly equal, with about 100 more issues gaining ground than losing. New highs checked in at 468, versus only 66 new lows. Anybody shorting this market or individual issues, is likely to be taking it on the chin. Our new highs-new lows metric continues to suggest the bull will run strong for some time and that there is no top in sight.

Gold again moved closer to the magic $700 mark, closing at $690.30, up 60 cents per ounce. Silver experienced a similar gain of 11 cents to close at $13.64. The metals continue to confound investors who see inflation everywhere, but no corresponding gains in the time-worn precious metal hedge.

Stocks are where it's at, and with everybody - including the Oracle of Omaha - thinking big, this rally could run for months more.

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