GE Subdues Forecast

Friday the market enjoyed options expiration--thanks for pointing that out to me PH. The NYSE volume was the lowest for the week. The prices seems to be drifting up but the punch is definitely gone. In fact, the SP500 and the NASDAQ have been up seven days in a row and, yes, they both made new highs for the move. The SP500 broke its March high which is a four year high so everybody should be happy. The last time the SP500 was at this level was shortly before 9-11. The NASDAQ has failed to break above its December high but it is close, about a percent to go. The Dow has almost 4% to go to make a new high for the move.

This upcoming week, the market is looking at earnings news for many companies. For the most part, the market is hoping for great news on the earnings front even though GE's forecast when it announced last week was not particularly robust. I don't know that companies will disappoint on the earnings front because obviously the big credit expansion is still in force. As long as people continue to buy on credit there is always a little more room for the liquidity in the stock market. But, we don't expect the party to last forever. Quite the contrary, we know that the credit expansion will be its own demise.

This week's market should provide some ability for you to unload some of those stocks with freshly painted high prices. For what it's worth, the market has continued overbought for the past week and trading last week was very toppy. Yes, it looked strong on the surface looking at prices but the underlying strength in the numbers was not there. I would say the mere fact that the market went up last week is a good reason for a drop this week. Clearly the prices advanced in part due to options expiration.

We continue to recommend gold and silver, the metals. Their prices have dropped to buying ranges again with silver just under $7. These could be excellent purchases for the road ahead. GLD itself is down near 42.

Dow Industrials: 10640.83 +11.94
BGEIX: 10.83 (good price to buy again with a good pullback last week)