Market Squeezes Out Another Positive Close

With first quarter earnings reports due to begin hitting the street later this week, the major indices managed to put on a smile at the close on Monday. Even the NASDAQ, which had traded in the red for almost the entire session, managed to gain fractionally.

Advancers and declining issues on the NASDAQ were dead even, with 1517 up and 1517 down, though gainers were far ahead on the NYSE, 2039 to 1214. New highs amounted to 317, near a peak, to just 108 new lows. This is a signal that the markets are about to make a break, either further to the upside (which means a 6-700 point move) or down about 4-500 points.

The Dow also registered its 15th positive day since the Feb. 16 top, more than the 14 down days, though the index is still 400 points off that high. It's been a real see-saw market, with alternating up and down weeks the past 5. If that's any kind of guide (probably not), we're due to finish on the plus side on Friday, though nobody's making book on it.

Dow 12,382.30 +27.95; NASDAQ 2,422.26 +0.62; S&P 500 1,424.55 +3.69; NYSE Composite 9,305.55 +43.73

Overall, it was a very tame day of trading. Even the oil bourses weren't bubbling as crude gained only 7 cents to $65.94. While that number is still too high for most of the public to want to comprehend, there seems to be some consensus among oil traders that there's not much more upside to this market. As the supply-demand scenario gives way to inflation and pricing pressure, oil, and its derivative, gasoline, may actually stabilize at slightly lower levels over the summer, all of which is good news for the economy and consumers.

The biggest news of the day was New Century Financial, the troubled sub-prime lender, filing for Chapter 11 bankruptcy protection. The company announced layoffs of more than half of its workforce, 3,200 in all, and other protections and refinancing arrangements with CIT Group and Greenwich Capital Financial Products.

The news was sobering and expected. However, the real fallout in the housing market may still be on the way as prices continue to fall in major markets. The cooling of the housing market is a slow process with the effects likely to be felt across the economy for a lengthy period of time.

After years of loose financing and consumers dipping into equity to finance all kinds of purchases, that spigot is slowly being turned off. The downward pressure in the economy will first be seen in large ticket purchases as households cut back on financing.

Gold and silver continued their in-range trading. It's almost gotten to be an inside joke, that holders of precious metals are now not hedging against inflation, but against their own well-being. After a dazzling run-up culminating at a peak of over $714 last May, gold has been one of the duller stories of the past year.