Stocks in Broad Rally as 3rd Quarter Ensues

After three weeks of see-saw trading which resulted in less than a 1.5-2% loss on the major exchanges (most of which was recovered today), investors took the beginning of the 3rd quarter as an opportunity to buy.

This was not an unexpected occurrence, as noted by the experts, there had been a significant amount of portfolio paring and clipping of losses, with only a small dose of outright profit-taking in winning positions.

The markets were up right out of the gate and the action was steady throughout the session even though volume was relatively light. This being an unusual trading week, with the Independence Day holiday smack in the middle of it, there are surely fewer active traders to be found.

Dow 13,535.43 Up 126.81; NASDAQ 2,632.30 +29.07; S&P 500 1,519.43 +16.08; NYSE Composite 9997.43 +124.41

There was no mistaking the direction of the market on Monday, as advancing issues trounced decliners by a better than 5-2 margin and there were 409 new highs to just 123 new lows.

Stocks weren't the only winners on the first trading day of the 2nd half of the economic year; oil jumped another 41 cents to close at another 2007 high of $71.09. With the biggest holiday of summer just another day away, the oil barons are making sure that American motorists pay through the nose at the pump (pardon the sloppy metaphor).

What may be driving the most recent rise in oil prices is the fact that the holiday will be in mid-week, somewhat limiting long-distance travel and forcing the hand of the oil cartel to jack prices to make up for slack demand. That's how the supply-demand logic works for the oil companies. If they sell less, they'll make up for it with higher prices, and make no doubt, there's price fixing at the very highest levels of industry.

Despite the troubling and potentially criminal behavior of the oil crowd, the US economy still seems to be humming along quite well. Interest rates are still historically low and GDP growth (or lack thereof) probably bottomed out in the 2nd quarter, though we won't know for sure for another 3-4 weeks. By that time, corporate earnings reports will be at full tap, so if news is not good on the overall economy, it could come as a shock. Regardless, corporate earnings are still on a buoyant tack and another rally to new all-time highs is likely to occur within the next 3-4 weeks.

It's prime time to put unused capital to work, shed losers and reinvest in companies that have been meeting or beating street estimates. Tomorrow, and over the next few days' posts, I'll offer some specific stocks and sectors.

Gold and silver posted gains of $8.30 and $0,27, but they look more like a dead cat bounce than anything indicative of a new direction in the metals markets.