Thursday, September 3, 2009

Bulls Take Initiative; Economic Outlook More Positive

It's a big world and US investors seem to be gaining confidence - little by little - in certain companies' ability to deliver goods and/or services at a profit. While governments enjoy the luxury of fiscal irresponsibility, running enormous deficits, businesses are treated rather differently, especially on Wall Street, where no earnings equals no share price. There are enough good companies listed on the major exchanges to continue the current long term upward trend for many more months, notwithstanding the effects of macroeconomic factors, especially job growth and capital formation.

The recovery in progress is one of the more quiet in recent recollection. Many analysts and investors don't even believe it's at all real, that the economy will sink back to less-than-optimum conditions, such as existed in the fall of 2008 and the winter of 2009. Unfortunately, the conditions present then are not even an approximation of economic reality today. Nothing stays down forever; nothing moves in a straight line; no indicator is infallible. We tend to trust ours, as much as our own eyes and ears some times, and that's a danger, but Thursday came in pretty much as expected. Some bulls got a little anxious and moved enough stocks ahead to finish with all the major averages sporting reasonable gains.

Dow 9,344.61, +63.94 (0.69%)
NASDAQ 1,983.20, +16.13 (0.82%)
S&P 500 1,003.24, +8.49 (0.85%)
NYSE Composite 6,546.60, +71.81 (1.11%)

Advancing issues rolled past decliners, 4477-1789. It was a nice little turn aided by some nervous short covering. Betting against rallies can be hazardous to your portfolio and this one is no exception. Economic reports have been neutral to good, evincing signs of a nascent recovery. It's not pretty... yet. New highs also led new lows, 114-46, on now normal, low volume.

NYSE Volume 4,624,282,000
NASDAQ Volume 1,905,575,000

While oil was barely changed, down 9 cents, to $67.96, the metals were skyrocketing. Gold bounded ahead $19.20, while silver added a massive 93 cents, to close at $16.29, a 12-month high.

Friday gets off with either a bang or a yawn as the August non-farms payroll data is released prior to the bell. Heading into the last holiday of summer, there probably won't be a huge reaction in the markets and the afternoon is usually dull. The markets are stabilized as much as possible with sentiment leaning in both directions. It's a nice set-up if your a prudent bull.

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