New High in the NASDAQ Comp

We don’t have much time this evening and we will have No time Thursday evening, and no post either, so we thought we would comment on Wednesday’s rally.  We figured we would see a little retracement of Tuesday’s decline but this rally was more than we expected.  The NASDAQ Comp broke its high for the move and did it on significant volume.  The morning rally was strong for about a half an hour from about 10 o’clock central time to about 10:30.  That was the moment that the NASDAQ Comp hit its high point right at 2333.  We traded for a couple of hours at that level before breaking through into the afternoon.  Still, the move was not as strong as it might have been given the enormous top it was breaking through.  After a 15 point up move in the Comp, that index traded down and sideways the rest of the day.  

Our key bearish indicator is the lack of momentum in this rally.  Our other indicators do not confirm this move.  It’s all in the price movement and don’t get me wrong, price movement is a good indicator too.  We just don’t see the technicals backing up this move today.  

There may be some follow through on Thursday but as of tonight there is some reason to believe that may not happen.  GOOG made an announcement after the close that they are planning to sell about $2.1 billion of stock.  We are waiting to see further developments in the market the rest of the week.  We have always indicated that this time of the month, quarter, is usually a strong time due to performance measures for investment managers.  These people have enough power (money) to move the market temporarily and it appears there is very little to stop them.

For that matter, the news out of the Fed on Tuesday was not bullish.  We would mention though that the Fed has not “tightened” in the traditional sense of the word.  Usually, when they decided that they wanted to affect the economy they would drain liquidity from the market.  This doesn’t appear to be the case as the money supply has clearly gone up by large amounts over the past two years while they have been raising rates.  So, what they are doing is raising the cost of borrowing on the short end of the curve but continuing to provide the funds.  The stock market should be going down on all of these fundamentally bearish things but instead there is plenty of money in the system and it seems to have gone into the stock market on Wednesday.

The market is now trading at highs not seen in quite a while.  This does not bode well for us bears.  We plan to maintain our positions even though there seems to be a lot of upside “potential”.  We do not think the rest of this rally will bring much higher prices but you are the captain of your ship.  And we say…

Be careful out there…

[We will try to post some Updates next week but we can’t promise when.  We are committed to posting the week of April 8th.]  

Dow Industrials:  11,215.70  +61.16
RYVNX:   18.00
RYAIX:  21.00
TLT:  87.51
BEGBX:  12.91