April 30 Daily Market Assessment

Stand by for Action!

Last week saw one of the biggest upward movements in market history. Does that mean that we could see the opposite move this week? Even though we are seeing very "toppy" charts on the DOW and the S&P, I don't think so. What I anticipate is a side-ways consolidation as we digest more earnings reports and economic news that should, by all accounts, confirm the market's bullish bias. Several indicators will reveal that inflation is still in check, specifically the Personal Income report and the Factory Orders report. At the end of the week we will see a favorable unemployment report, as well. All this will frustrate traders looking for a rate cut in the near term, but give heart to those (like myself) who see a change in the Fed before year-end. After a 3Q or 4Q rate cut gets priced in, the markets will surge once again.

In the meantime, I've taken long positions with HPQ, KO, and VCLK. I also sold some puts on AXE. In addition, I've taken long positions on three stocks in the oil patch: NOV, VLO, and SPN. I expect the annual run-up in energy prices to kick in right about now, based on the charts I'm reading.

Summary: Short-term bullish, Long-term bullish

April 24 Daily Market Assessment

Caution Going Forward

Yesterday's retreat was not unexpected, but the negatives were stronger than I anticipated given that there was NO news at all, other than the Barclays-ABN bank merger announcement, which had been pre-announced last week. I think that the shorts are a lot stronger in this market than I thought. I look for another day or two of "profit-taking" before we move to higher ground. Finding stocks moving upwards will be tough, but do-able. I'm looking hard at GES (Guess) and VCLK (Valueclick), plus my recent favorite, WCG (Wellcare Health Group).

I'm still planning to move out of cash, but I'm watching my step.

Summary: Short-term Bullish, Long-term Bullish

April 23 Daily Market Assessment

Off to the Races!

The bull market has been confirmed by a strong upward push last week. After earnings expectations were lowered earlier in the month, company after company has come through with good numbers. In fact, 1Q07 will likely report the highest corporate earnings in history, a number approaching $500 billion!

With that said, I expect a soft market today, since no significant news or earnings reports will appear until tomorrow. The market likely will "take a breath", and may even dip down. But all the signs are in place for another good week. VIX is close to 12, having dropped from 17 just six weeks ago (VIX is a measure of fear in the market), the shorts are way overboard, which suggests a short squeeze this week, and the GDP numbers will probably be O.K.

Consequently, I am moving back into the market. Today and tomorrow I will commit approximately 30% to equities and 10% to options. More details later.

Summary: Short term bullish, Long term bullish

Daily Market Assessment

Was it a last grasp?

Yesterday was a solid continuation of the bull run in the market. Citigroup's numbers were a reflection of their aggressive cost-cutting plan, and the market liked that. And when Bank of America and J.P. Morgan announced their bid for Sally Mae, the market liked that even more. What's not to like. Today, I think, we will find out.

We have several important announcements today, and I think they will be viewed by the Street as evidence that any rate cuts will be postponed until next year, which we don't like. The current rally has had a rate cut priced in, in my opinion. When it disappears, or moves further away, it should cause a lot of so-called profit-taking, as the Big Money rotates back to consumer goods and financials. That should start today.

Summary: Short-term bullish (just slightly); Long-term bullish.

Daily Market Assessment

Hope is everywhere. Spring has sprung!

Well, I could not have been more wrong! I'm back after two weeks vacation in Italy (fantastic, by the way!) and what do I find? a market that's squarely in bull mode. The Dow jumped 265 points in two weeks, the NASDAQ and S&P are up almost as much. Oil has retreated and the Fed has not spooked anyone as much as I thought they would.

So where does that leave us? My overall assessment is still one of caution, especially since we are headed into earnings season this week, a period that is notorious for surprises in both directions. I think we will know in the next few days whether we are in real trouble, however. Many of the techs have already issued warnings to take the steam out of their announcements; if anything, we'll see surprises to the upside. But the Blue Chips are the ones to watch. Citigroup (C) on Monday, IBM on Tuesday, JP Morgan on Wednesday, and Merck (MRK) on Thursday. Right now, I think they will do well, and the market is going to respond in kind.

Summary: Long-term Bullish, short-term bullish.