More Gains as Rally Extends; S&P Tops 1,500

The run continued on Thursday, despite some very disappointing news from General Motors (GM), the markets were buoyed by a positive Labor Dept. productivity report which showed an uptick of 1.7%, nearly a full percentage point higher than the consensus estimate.

With the S&P 500 breaking an important psychological mark, that particular index is poised for a breakout. The all-time high is within hailing distance, a mere 25 points higher and when that is breached, the floodgates will be open. The S&P will join the Dow in uncharted territory and the gains should continue for a good period of time.

Dow 13,241.38 +29.50; NASDAQ 2,565.46 +7.62; S&P 500 1,502.39 +6.47; NYSE Composite 9,753.94 +35.94

It's important not to get married to stocks during this phase, as sectors and industry groups will rotate, though the overwhelming drivers continue to be tech, innovation and globalization. Companies that can leverage their advantage in these areas will emerge as winners and appreciate in spurts. This may become very much a traders' market, with quick turnaround trades the key to making money.

Buy and hold strategists need not be dissuaded by this, as the long-term viability of many leading companies should remain intact throughout.

Even though today's market action was somewhat muted, it was still in keeping with the overall positive tone which has prevailed of late. Advancing issues outdid decliners by 17-14 margin. New highs stood solidly at 419 versus just 62 new lows. That number continues to amaze and indicate that the rally will continue unabated.

A 4th straight day of slippage in the price of oil added to the upbeat mood. Light, sweet crude for June delivery dipped 49 cents to $63.19.

The precious metals played contrarians for a day. Gold closed at $684.40, up $9.30, while silver was less of a player, gaining 18 cents to $13.51. These commodities have been playing this game for over a year now and are nowhere near their 2006 highs. After sizable run-ups in the first part of the decade, the metals have been lackluster performers since early 2006.

US Stocks on Fire, Investors Face Buy-Sell-Hold Dilemma

In the face of a rapidly-rising market typified by another semi-spectacular day in which the Dow set another record close, investors are now faced with the time-worn predicament: Buy, Sell or Hold. Most, judging just by the indices, are holding and buying more, as first quarter corporate earnings reports continue to flow in with satisfying regularity.

One could hardly blame them. The run-ups from mid-March to today (just over 6 weeks): Dow, up 1136 points; NASDAQ, 207 points; S& P 500, 118 points; NYSE Composite, 790 points. These are all in the neighborhood of 8% gains, which normally (whatever normal is these days) would be good for 6 months or a year. Some individual stocks have fared even better.

Impressive, indeed, and still capable of going higher, much higher. Your investment outlook will certainly vary by the length and quality of your experience. Anyone who's been in stocks for the last 20 years can be colored by the deep declines of 1987 and the dot-com collapse of 2000, but also by the spectacular gains of the late nineties - especially 1999 - and this excellent early run since early 2003.

That's where the quality of your experience comes into play. If you were on the right sides of trades in the boom years, you took the declines in stride. Contrary to that perspective would be buying in close to peaks and then being blindsided. Most of us have experienced a share of both sides.

Dow 13,211.88 +75.74; NASDAQ 2,557.84 +26.31; S&P 500 1,495.92 +9.62; NYSE Composite 9,718.00 +78.21

To offer some perspective, while the Dow is at all-time highs, remember it took 6 1/2 years to get to them. The NASDAQ is still off 50% from its all-time high, so there's plenty of room there. And the S & P 500 closed at 1527.46 on March 24, 2000. It's just 30 points from there - an all-time high.

More and more money - much of it created by the Federal Reserve's loose credit policies of 2001-2004 - continues to flow into stocks and there's no indication that it's about to stop. I have to admit to being late to the party, thinking there was going to be a major correction, but that seems more and more a remote possibility.

If you're in this market now, hold and buy more. If you're not already in, it's not even close to being too late. In fact, the next 6-9 months may be exceptional.

Find what you're looking for with Yahoo Search - when close isn't good enough.

The US economy is still the most stable on the planet when investors look for gains without much risk, they look to the NYSE and the NASDAQ. Stocks are going to continue higher and there's no looking back.

Volume was strong again today, as has been the case of late, and the indices other than the Dow experienced stronger gains, indicating that the Dow's pleasure may be spreading.

The advance-decline line also gives this more credence, as advancing issues outpaced decliners by a 3-1 margin. As well, there were 406 new highs and a paltry 83 new lows, more evidence that this rally could actually be gaining momentum. That is not surprising, as these kinds of things run in cycles. The first phase was getting to the new records on the Dow, and now, phase two, will be longer and more sustained, though probably not as exciting. Nobody is going to forsake 12-15% gains over the next six months, however, which is exactly where this is heading.

Oil prices eased again on Wednesday - the third decline in a row - by 71 cents to close at $63.68. Gold and silver were also lower, though only marginally. Memo to gold bugs: It's time to sell some of your excess and try your hand at stocks.

Dow Rockets to Another New High; Other Indices Lag

The Dow made another in an ongoing string of records on Tuesday, gaining 73 points to surpass the previous record (set this past Friday) by 16 points. While the Dow has been enjoying a terrific ride, the other indices - especially the NASDAQ - have lagged, as they did today.

The Dow was at least twice as good on a percentage basis than any of the other indices, making the case that the 30 blue chips are still considered a safe bet in an otherwise turbulent marketplace. Only 7 Dow stocks closed on the downside, most notably Proctor & Gamble (PG), which was bid up yesterday, but dumped today upon the release of the company's 1st quarter report. P&G turned in profits of 74 cents per share, as opposed to 63 cents in the same period of 2006, though the number was short of analysts' expectations and the stock sold off 1.57 on Tuesday.

Dow 13,136.14 +73.23; NASDAQ 2,531.53 +6.44; S&P 500 1,486.30 +3.93; NYSE Composite 9,639.79 +12.06

Advancers led decliners by a slight margin, with just 150 more issues higher than lower. There were 213 new highs and 150 new lows, the closest those have been in more than three weeks.

Check out ESPN.com, the world leader in sports coverage.

The trend is clearly in place for a broader pullback, as evidenced by the internals and yesterday's partial sell-off.

Perhaps the only reason the indices closed higher at all was the lower prices being bid for oil, which closed down for the second straight day. Light crude for June delivery fell 1.31 to $64.40, though the price would have to fall below $60/bbl. and settle there for any realistic relief for both consumers and businesses.

Following that lead, Gold was off 6.20 to $677.30, while Silver lost 21 cents to end the day at $13.37.

At this point, record high closes on the Dow are becoming so commonplace as to lose impact. The run of the blue chip companies has not nearly been matched by the NASDAQ or the S&P 500, reflecting a more challenging environment for mid and small-cap stocks.

The risk of a significant downturn grows with every uptick on the Dow. Buying high is not normally a good idea and it probably isn't at this juncture.

Stocks in Broad Retreat on Spending Concerns

After reaching record highs in each of the last three sessions, the Dow Jones Industrials took a breather on Monday as investors mulled economic data instead of quarterly corporate reports. The other indices followed suit, led by the NASDAQ, which suffered a 1.26% decline, by far the largest percentage loss of all the exchanges.

Dow 13,062.91 -58.03; NASDAQ 2,525.09 -32.12; S&P 500 1,482.37 -11.70; NYSE Composite 9627.73 -77.63

Once again, the Dow stocks held their own as investors fled more speculative issues in favor of the blue chips, though 20 of the 30 Dow stocks were in retreat. The losses could have been worse, if not for the strong showing of Proctor & Gamble (PG), which rose by 1.42 (2.25%) in anticipation of what is expected to be a solid quarterly report on Tuesday. Volume of PG was more than double its average.

Market internals showed a significant shift in perspective as the week began and the month of April ended. The advance-decline line was the worst in over a month, with declining issues swamping advancers by a better than 7-3 margin. Many more new lows made an appearance as well on Monday, with 137 (also the highest figure in the past 4 weeks) new lows to 300 new highs.

It remains to be seen whether these metrics are going to prove prophetic or just axiomatic of general profit-taking. With the Dow gaining more than 700 points in April alone, some pullback was expected and probably overdue, though longer term issues - such as consumer spending (up a mere 0.2 in March), burgeoning federal deficits and the continuing malaise in residential housing - persist. Recessionary forces are present and the ongoing high price of gas is also a contributor to sour moods and souring predictions.

Speaking of oil, the price of a barrel of light sweet crude also took a short hiatus, losing 75 cents to end the trading day at $65.71. The price of oil and gas continues to be a thorn in the side of American businesses of all sizes, affecting the purchasing power of consumers and driving up the cost of doing business everywhere.

The oil companies may be getting an unwelcome reminder of how upset people are on May 15. An email is making its rounds on the internet urging consumers to boycott gas stations nationwide on that date and forward the email to others so that they may participate. There will be more on that effort in this space tomorrow.

Gold gained $1.70 and silver was unchanged.

Storm Clouds Gather: Dollar Down, GDP 1.3%

There's a palpable disconnect between what's hot on Wall Street and the realities of the US economy. While the Dow makes new highs day after day, extending one of the longest bull markets (55 months and counting) without a 10% correction.

Corporate profits are the drivers of the current rally which has taken the Dow on a 1000-point ride upwards over the past two months and the reports have been solid, if not spectacular. The other side of the equation is comprised of economic indicators, the value of the currency, credit markets and mood, may be more forward-looking than a string of corporate pluses and rising indices. Those indicators are forecasting more pain than pleasure, but the market has yet to buy into the argument.

So, is this the last hurrah? Are investors wringing every last cent out of stocks in anticipation of a dramatic reversal, or are investors just confident that US businesses are sufficiently globalized that they will not be largely affected by suffering in the US market alone. At the end of the day, the major indices registered a ho-hum split decision.

Dow 13,120.94 +15.44; NASDAQ 2,557.21 +2.75; S&P 500 1,494.07 -0.18; NYSE Composite 9,705.36 -10.13

While these investors should be applauded for their optimism, the decline of the US economy should have some ripple effect across the spectrum, though the extent of the decline (we may already be in recession) and the impact on various industry sectors is difficult to calculate, much the less correlate.

First quarter 2007 GDP showed a feeble 1.3% growth rate according to the Commerce Department, the lowest quarterly rate since the first quarter of 2003, which closely coincides with the beginning of both the current bull market and the start of the war in Iraq.

It should come as no surprise to anyone that this bull may be on its last legs, especially with the public discontent and debate to end the war sooner rather than later. Bull markets don't last forever, just as recessions aren't the end of the world. As a matter of fact, recessions are necessary and vital parts of a properly-functioning market economy. Expansions build excess and excesses must be wrung out to put the system back on a functional footing.

And who can say that the economy wasn't full of excess? Witness the housing and credit boom of the past five years. That rocket fuel has been spent and house prices are plummeting back to earth while credit qualifications by banks and finance companies ratchet up the pressure. The stock market - especially the Dow - looks like the last refuge for safe money.

Make note of this number: 13,197.50. That's the all-time intraday high (April 26, 2007). We may go past it, but if the market doesn't continue climbing past it over the next week, the summer and fall could be very trying seasons for US equity investors.

Another of the reasons the markets may soon struggle is the high price of oil and gasoline. Crude was up again on Friday, with a barrel for June delivery set at $66.46 after traders tacked another $1.40 to the price. Keeping with the tone, Chevron posted 1st quarter profits of $2.18 per share (net $4.7 billion), compared with $1.80 per share ($4 billion), during the same period last year, an 18% gain, or roughly the same percentage deeper US motorists dug into their pockets to fuel their transports. Lovely.

In currency trading, the Euro reached an all-time high against the greenback of $1.3682, before closing slightly lower, at $1.3650. Barely noticed by the general public, the dollar buys less overseas, driving up import prices on just about everything. The dollar weakness has been evident for years. Easy credit, loose fiscal policy by the government and a huge - and growing - federal debt have made the US dollar lose respect in world markets. The dollar's decline is gradual, but surely it is killing us.

Gold closed at $682.50, up 3.80, while silver ended the day at $13.58, a gain of 12 cents.

Earnings will continue to make headlines next week, but so could some serious profit-taking. Expect a roller coaster.