A Rally Nevertheless

Not bad. 150 points on the Dow Jones.  It certainly wasn’t the best rally in the world.  But, it was a rally nevertheless.  Someone called my radio show today asking if I’d buy today based on the strength.  I told him I’d wait to buy any big positions after I saw how the day finished.  It’s always disappointing when the market doesn’t finish near its highs.  A drop of 100 points on the Dow in the last 30 minutes is a little worris0me if you’re bullish.  Regardless if the market starts to rally now or in a few days, I think we’re setting up for a longer lasting rally.  One that we can stay in a while and make some meaningful money.  This is all based on technicals.  The pendulum has swung where you should be covering your shorts and considering getting long.  Don’t let the media fool you.  Nothing changed today about the economy or any of the fundamentals.  In fact, this morning, the ADP report came out worse than expected and worse than January.  This is kind of a rough number for the real government number which will be announced Friday.  This report comes out on the 4th of the month every month.  On January 4th, the ADP report came out pretty bad and we fell for two straight months because the stock market had been rallying and was running out of gas.  Today, the number comes out worse and we rally.  Go figure.  That’s some evidence that it was time for it to rally.  That’s it.  

President Obama surprised us over the last two months with awful business policies and the market has discounted that.  Now that we know exactly how he’ll govern, there isn’t anything he can do to surprise Wall Street.  That and the combination of being oversold is why we were up today.  Not because of a jobs report or some China stimulus package. 

Freeport McMoran (FCX)

Freeport McMoran (FCX) finally broke out today on very heavy volume.  I purchased a little bit this morning.  I’ve been watching it for a while as you know and it finally gave me reason to buy.  Consider it a trade though just as most of my holdings are trades.  It has a pretty picture.  It’s as simple as that.  You could argue everyone’s investing in it because China is going to spend a ton on infrastructure and push copper prices up.  But, that will take a while and may not be enough to turn commodities around.  But, the most beaten up sector besides financials is probably commodities.  Therefore, that’s the place that stands to rally the most. 

As far as the rest of the market, when I do buy, there’s a good chance it will be in materials and small caps.  Those are two volatile areas that can be purchased using various ETFs.  But, remember, as good as this rally might be, it’s still just a trade.  I am still not seeing any signs of a significant market bottom.  Today was a step in the right direction.  But, without exploding volume, tremendous upside volume as a percentage of overall volume, and outright soaring demand, I’d give it a grade of B.  Enough to say good job, but I’m not on board just yet.


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March 2009
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