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