Thursday, April 16, 2009

Market Keeps Going Up

Top Line: The stock market continues to defy gravity with the Dow up another 100 points on Thursday.

Jamie Dimon of JP Morgan had a good time announcing earnings this morning. The market still had a little trouble in the early going but from the morning lows there was mostly upside. Early selling and late buying means the uptrend is continuing.

The problem today for us was that gold was down and GDX was down as well. We were considering making some moves to buy some more GDX today but we didn't. If you are looking for something to buy, GDX looks like a good one here in the low 30's. These gold mining stocks are so under priced relative to the price of gold and will have a spring loaded effect once gold gets back over the thousand dollar mark.

The Treasury bonds were somewhat weak today but they have been coasting in a fairly narrow range for nearly three months. The little spike they had on the Fed's announcement that they would buy long dated Treasuries quickly retreated. We don't think these bonds can continue in this narrow pattern for much longer and we think they will break to the downside (price...yields will go up) soon. This break should allow stocks to move up accordingly.

We wanted to mention something we have been watching for the last few days. We like the NASDAQ 100 (NDX, if you want to look at it with bigcharts.com) as an index. NDX is the basis for QQQQ...but we digress. The NDX closed at 1352 today and we are watching the election day high that it reached on November 4th which was 1378. The NDX is 2% away from that important high. Other indexes have more to go but once we do get over that November high, there should be a further strong move. We'll keep this simmering.

We have been watching the volatility indexes which have been coming down the last few days. We're not sure if that has anything to do with the options' expiration tomorrow, but the drop means some of the fear is coming out of the market. There is a long ways to go to get to our exit point but as these indexes come down, the possibility remains that there will be stock market pullbacks to push them back up again.

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