Another Pleasant Valley Friday

All's well on Wall Street... or so it would seem from the euphoric kind of trading we've witnessed in recent weeks. Since March 12 - a span of 32 sessions - the Dow has tacked on 1250 points and is looking for a blow-off top, once it breaks through a double-barrel of resistance at 12,900 and the psychological level at 13,000.

There's little doubt that investors will continue to spend on equities despite cloudy economic circumstances, determined, as they are, to prove that the economy isn't as bad as the endless stream of headlines and economic reports seem to suggest.

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On the bright side, higher energy and food prices, stagnant labor costs (non-rising wages), a dead housing market and soaring raw material costs seem not to have fazed the titan of Wall Street one whit. Earnings continue to come out from corporate America in good fashion, with more than 2/3rds of the companies reporting having met or exceeded expectations.

That those expectations have been lowered for some doesn't matter either, as long as companies remain profitable. By and large, most companies are surviving quite well. The average middle-and-lower-class American, however, is spending every last weaker dollar on groceries and gas, and little else, though the stories of real suffering have been few and far between. We're getting along, or, as the erudite John Maudlin might say, muddling through.

Dow 12,891.86 +42.91; NASDAQ 2,422.93 -5.99; S&P 500 1,397.84 +9.02; NYSE Composite 9,344.31 +94.09

The University of Michigan reported on Friday that consumer sentiment has fallen to its lowest level in more than two decades with a reading of 62.6, just a touch lower than last month's 63.2.

Advancing issues overcame decliners on the last day of the week, 3693-2489, but new lows maintained their edge over new highs, 164-127. For all the gains over the past six weeks, there are still some real dogs out there and they are still getting beaten down.

The coming week should prove fascinating and provide the impetus for the blow off top for which this market so sorely is wishing. On Wednesday, the FOMC will likely cut the federal funds rate another 1/4 point, keeping traders and Keynesians happy, but by Friday, the Labor Department will once again spoil the party with its Non-farm payroll report and the unemployment rate, expected to remain at 5.1% or maybe tick up to 5.2%, still historically low.

Oil perked up another $2.46 to $118.52. This just a day after Wall Street was cheering a temporary pullback in price. Temporary was true. It lasted less than one day. Gold gained just 30 cents, closing at 889.70, while silver added 19 cents to $16.96.

High prices don't matter. The world is adjusting to the global economy. Besides, President Bush assures us that tax rebate checks (Isn't the government lovely, giving back our own money? Bread and circuses, people.) will be in the mail on Monday.

Truth of the matter is that the world is awash in currency. Most central banks have added to their money supplies by 10% or more in the last year. While credit may not be so easy on the surface, the reality is that the best way to garner additional funding is to be large and claim near-insolvency, a la Bear Stearns, Citigroup, home mortgage defaulters, Freddie Mac, Fannie Mae, et. al.

The government (uh, huh, taxpayer dollars financed by more debt) will bail out anyone. There's no pain, no risk, no responsibility. It's a wonderful, faultless fiat system. Look for a blow-off top on Wednesday, followed by a retracement following Friday's Labor Dept. report.

NYSE Volume 3,831,665,000
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