Wednesday, April 25, 2007


Market Action:
Straight up. The party started early on Wednesday and with only a minor settling of prices after the initial pop, the market traded up the rest of the day. The early pop was provided by the news that AA (Alcoa) was planning some divestitures which the market assumed meant it was getting ready to be taken over. In fact all but one Dow component were up, some up a lot.

The Dow has now made it up 17 out of 19 days for some major record and with Wednesday evening’s news from AAPL (Apple), there should be one more push in the morning. AAPL reported earnings after the close on Wednesday that were much better than expected which caused a surge of buying in the stock. AAPL ended the after hours session up about 8%, much like AMZN on Tuesday evening.

We remain in awe of this vertical rise that the market has been on for the past four weeks. We can’t remember a time that was so straight up. When we look at the 1000 point run the Dow has been on in that time, we can’t help but think this can’t go much further and every day it seems to go some more.

Well, this rally will end and we think when it does, we will see an equally vertical move to the down side. This is almost assured the further up this thing goes. We are at the end of the month here with three trading days left which is normally the stronger period of the month—we cringe at the thought of it being any stronger than it has been.

The market has not responded to news, expect for earnings news that is good, and it has gone up without any real solid economic news. When this type of thing happens, the market can get out of hand. On Wednesday, the market was strong across almost all sectors and volume was strong and confirming the move. The market continues to be overbought and needs some time to relax—we don’t think it will relax much until next week.

As we said, “Sell in May and Go Away”, and as you recall, early May is our suggestion.

Dow Industrials: 13,089.89 +135.95
VIX: 13.21 (up on the day?)
HUI: 351.32
QQQQ: 46.31
QQQRS: 0.55 bid
QQQRT: 0.84 bid
RYVNX: 15.35
RYAIX: 20.52
RYCWX: 32.71
TLT: 88.49
BEGBX: 14.06

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