Monday Rally

The Dow pushed higher at the opening on news that GM’s profit was worse than expected and that stock popped by about 10% in the early going?  GM made some comments about cutting health care costs and the market liked that.  Later in the morning, Altria Group, formerly known as Philip Morris (MO) was up on the news of a favorable ruling from the Supreme Court.  The government tried to get the Court to review whether it could go after some of the prior profits of tobacco companies to pay some of the “fines” for the landmark ruling against the tobacco companies.  The Supreme Court denied the hearing.  Both stocks jumped large percentages today and with both of them part of the Dow, they pretty much made up the entire gain in that index with MMM (3M) up to finish out the 60 points.

Today’s stock market tried to go down in the morning but, by the end of the day, had a nice rally.  The Dow Industrials managed a nice 60 point move.  Starting at last Thursday’s rebound from the 10,150 area, the Dow has managed almost 200 points.  The biggest problem with the rally is the lack of volume associated with it.  And, today’s advancers were just a few better than the decliners at 1763-1499.  This is not exactly the kind of pop the bulls were hoping for today.  After all it is Monday.

We don’t think this rally will take the market up very far and should be over before the week is up.  You have been given a wonderful opportunity to exit more long positions before we see acceleration to the down side.  

As mentioned last night, we purchased TLT, the bond ETF.  The bond market had a decent pop at the opening and pushed the TLT to 90.61.  We decided to hold off our purchase until later in the day and were able to pick it up for 90.25 before it closed at 90.21.  We are content with the price we entered the trade.  Now we would like to see a move back to around 95.  We will keep you posted on our outlook.  We normally don’t like to bring bonds into the Wednesday Update but we make an exception this time with an ETF, which is technically a stock.

Gold was up today as well but failed to run past last week’s high.  We don’t expect much follow through and don’t think it can break last week’s high.  If it does, we are still not going to get long this commodity until we see it Drop about $50 or so.  For its part, the HUI managed to match Gold’s move today, up 5 points, but the HUI is well off its highs from a couple of weeks ago. Today it closed at 234.77 after being at 250.33 intraday on September 30th.  We are going to be very patient with this sector, but we are hoping to get back into it sometime later this year.  We’ll keep you posted.

Dow Industrials:  10,348.10   +60.76
RYVNX:   22.09  (still a good profit from 20.56)
TLT:  90.21  (Our entry point, 90.25)