Update 8:30PM DST

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Yours truly has been a nervous bull ever since leaving the bear camp. Last night I spoke about having one eye on the exit door.But just when I thought I could be out, they pulled me back in.



Like it or not, today’s stock market action was powerful and could eventually lead to a test of critical resistance in the 9000 area on the DJIA. We blew through key resistance on the S&P 500 at 800. Does this mean happy days are here again? Doubtful. But one can’t deny it’s at least one of the strongest bear market rallies ever. The end of the run may coincide with a knock at my door from the “Don’t Worry, Be Happy “crowd with an application in hand.

U.S. Stock Market - There were several factors that thankfully had me exit from the permabear camp just one trading day before the turnaround but none was more important than my biggest oversold technical buy signal in my 25 years on Wall Street. Make no mistake about it, technical analysis is extremely useful, especially in identifying significant major tops and bottoms.

While we’re no longer deeply oversold, there’s nothing technically to suggest this run up is over. We certainly can see some consolidation after a nearly 500 point update but closing above some key resistance strongly suggests we’re not close to any major top IMHO.

Foreign Stock Markets - When I removed my big bear suit, I added several foreign equity ETFs to my model portfolio. I continue to believe being over-weighted in foreign markets is a much better choice for years to come. I do think the most likely economic scenario as of today is an “L” shape recovery here in the U.S. I do think many other world economies won’t be held back as much as us.

U.S. Treasuries - As noted in my weekend comments, I think the Fed move last week was the last great chance to short the 10-yr. and 30-yr. Treasuries. I’ve looked for one more opportunity at 2.50% on the 10-yr and got it. I call it a no-brainer and here’s why.

The Fed’s decision to effectively begin a major monetizing program was a shot heard around the world. While you won’t hear governments simply come out and say so (even though the Chinese have), I believe the world realizes the U.S. Dollar is being debased. Since it’s “currently” the world reserve currency, these governments have to be very concern that their currency is likely to increase in value versus the U.S. How is that going to help them on the trade front when many of them will be looking to expand exports in hopes of getting back on their feet economically? Mark my word, this is going to become a critical factor in the months ahead (and one that should eventually lead me back to the bear camp). I see the 10-yr. at 5%+ in the next 12 months.



U.S. Dollar - The inability so far to make back any significant losses from last week’s watershed event suggests to me that the market may try to push the U.S. Dollar Index below key support around 83. One thing is pretty clear to yours truly, all that chatter how the U.S. Dollar was in a new, powerful bull market was as silly as all this talk coming from my friends in Vancouver that this is their beloved Canucks year.

Precious Metals - It may not have looked like it, but precious metals showed surprisingly strength today given the big run-up last week and the assumption the “safe-haven” play was gone and metals should go lower ( But they dis sell-it off somewhat in the access market). If the stock market has another big up day and the precious metals hold again, we may finally have the foundation to see gold challenge $1,000 U.S. Stay tuned.

Oil - It was easier to find a needle in a haystack than a bull on oil when I turned bullish in late December. The talk back then was the $20s or even lower was only a matter of time. I kept pointing out the fact that oil was not only not going down, but actually rising in the face of so-called bearish news. I said this was a strong indicator the bear market was over. I think we can get to $60 before some strong consolidation. As always, Wednesday’s oil inventory numbers should help dictate where we go for the rest of the week.

Northern Dynasty Minerals - I want to follow-up to my post earlier today on NDM. IMHO, one of the key reasons NDM has never been able to get a market valuation close to its peers, is because of a anti-pebble campaign that has managed to be quite vocal and grabbing press. While there’s clearly environmental concerns, people close to this deal have long believed that one man was the main financier of the opposition. This story ran over the weekend. Late today, I received this story.

Technically, NAK is exhibiting its best technical action in quite some time. The $7 area is resistance but the more times we test it, the more liklihood is we eventually go through. Stay tuned.







grandich.agoracom.com