Tax Day is Here

Top Line: The stock market did open lower on Wednesday and then rallied, especially the last hour, with the Dow starting out down about 60 and finishing up about 110. Was it a good buying opportunity or not? It sure didn't feel like it.

Our position about the market advance from last month has been that the market will not let most investors back in without paying higher prices. Even this corrective phase we've been in has been mostly sideways with little downside. That could change but for now, the market still reserves the right to go straight up from here.

All of this talk about whether the Economy is out of the woods or not has very little to do with the stock market. In fact the stock market should be giving us clues as to what the economy is going to be doing several months from now, not the other way around. So, you can listen to Roubini or any other economic bears but remember they are not talking about the stock market. They are gloom and doom about the economy.

All of this negative talk allows the stock market to continue to press higher. As long as skepticism is ruling the media, we will continue to hold our long positions. We are finally starting to see the volatility indexes drop into the 30's but these levels are still very high and need to come down quite a bit before we start thinking of selling.

Wednesday was mostly a dull day with the exception of the final hour in which the Dow gained about 120 points. To us, that's not too convincing although the Dow did retake the 8K level.

The financial markets are all struggling with the "turn". Treasury bonds are holding up ok for now but we think that won't be the case very long in spite of the Fed's purchases of Treasury securities. The Fed doesn't think it's a problem to print money and buy Treasury securities because inflation is not a threat. Today's CPI number mostly confirmed that in their minds. To us, the days of low inflation are quickly turning into inflationary pressure which should be very good for gold and the miners. So far, though, gold has fallen through the $900 level and is having trouble with it. We will keep our eyes open for developments.