Thursday, May 1, 2008

Massive Gains on Turn-Around Day

After witnessing the huge post-Fed sell-off yesterday and laughing at fooled investors, I found myself on the other side of the aisle today as the indices took off running and hummed to big across-the-board gains on Thursday.

The thrust forward seemed intent on the Dow closing above 13,000, as if to confirm that the worst of the subprime/recession/credit squeeze/inflation debacle is solidly behind us. The Dow made its move, establishing either a double top or just the breakthrough above a significantly emotional trading level.

We'll not know which it is until next week at the earliest. This is either a top or the Dow will proceed to 13,500, which will then be the absolute top, followed by a wicked decline. I don't know which I'd like to see, though I'm about done with the gains of the past six weeks.

Should the Dow push towards 13,500, I will ride the roller-coaster up, and then all the way back down to 12,000 or lower. I'm still not convinced that January-March was the bottom. There are still enough unresolved issues in the economy for the markets to move significantly higher, politics or not.

Meanwhile, I've been putting the finishing touches on my Investment Advisory Newsletter and am splitting hairs between going long and short, though my gut continues to tell me this market is overbought. Earnings will remain the focus through most of next week before economic news and reports should begin to shape the trade.

Dow 13,010.00 +189.87; NASDAQ 2,480.71 +67.91; S&P 500 1,409.34 +23.75; NYSE Composite 9,395.04 +95.44

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Advancing issues whipped decliners, 4347-1925, but new lows retained their long-held advantage over new highs, 164-140. Friday and Monday's trading should determine direction according to the new highs-lows gauge.

With the markets and the dollar showing strength, commodities took it on the chin once again. Oil dipped another 94 cents, closing at $112.52. Gold slipped even further, to a 4-month low, dropping $14.50, to $850.90. Silver shed 39 cents to close at $16.21 per ounce, a 3-month low.

NYSE Volume 4,414,284,000
NASDAQ Volume 2,344,251,000

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