Thursday, May 1, 2008

Bunch of Everything

Well everything that didn't happen yesterday happened today. The dollar rebounded strongly, commodities dropped sharply, and the market had a true breakout both on XLF and the S&P 500. Breadth wasn't as good as maybe you would have liked and the volume wasn't as strong as maybe you would have liked but the bulls are firmly in control. Yesterday was a wash for bulls and bears, today was a bull touchdown in the 4th quarter.

This sort of surprised me today with the employment number coming out tomorrow. My guess would have been this type of move would have come tomorrow if the employment number was just bad.

Maybe it has to do with the beginning of the month. Seems like day one of each month starts a drastic shift on money.

As a side note about that employment number tomorrow, I have read several articles saying that the way the government calculates employment that April is most biased upwards of all the months. The way the government calculates how many private jobs were created or something like that.

So we remain overbought on a technical basis but that can became more overbought. We are about 5 weeks into this current rally. The September October rally had about 6 to 8 weeks. The next big level is the channel trend and 200 day moving average which is somewhere around 1425 to 1440. You take that out and we really will have broken almost everything from a technical perspective.

I am a fundamental guy and the only thing to do to pass the time waiting for some break in a huge reversal rally is look for points where maybe the trend will reverse. I can look at the fundamental data coming out and right now it just does not matter. How can an increase in jobless claims back up to that 380,000 level mean a 3% up move in the NASDAQ? How can Citigroup raising and diluting thier equity base mean a 4% move up? You can't tell me that fundamentally Ambac is worth as much today as it was where a couple of weeks ago before they announced massive losses. I just can't believe that is a fundamental move to go up 100% in two weeks. Maybe I am wrong. Time will tell.

This may be my last post for a few days. I am flying to Omaha for the Berkshire Hathaway annual meeting. Should be an interesting meeting.

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