Friday, May 18, 2007


The Dow continues to surge along with the Nasdaq and S&P. Transports, real estate and Semis were down, everything else was up. For a change even the small caps decided to join in the action up almost 1%. Looks like there is no stopping this market. On a personal note despite the presence of hedges, the fund still rose by ridiculous amounts. I don't know whether I should be worried because the last time the fund did so well was prior to the May June decline of last year. The Dow is up 7 straight weeks which is a phenomenal achievement. Can we go up next week and the week after ?

The rising stock market has also helped boost consumer sentiment along with job growth. Higher gas prices have had no effect or so it seems. All is well with the US consumer. So much for all the pessimism.

Microsoft's acquisition of aQuantive has put Valueclick in play. Long VCLK is almost a no brainer.

On a side note I have been thinking lately about the possible reason for this phenomenal bull streak. Apart from cheap money, I keep hearing talk about the lack of retail participation. I believe that the retail investor still has memories of 2000-02 and the large losses they sustained. I feel it will be years before retail investors become bullish about the markets again. If one goes back to the 1929 Wall Street crash, it wasn't until the 1950s thats investors once again became comfortable with stocks. Without retail participation, the big funds really don't have anyone to distribute stocks too. So the only alternative is to keep buying and drive prices higher. This theory may not be correct but it is something to consider. Smart money loves selling to dumb money. But if there is no dumb money to sell to then, smart money doesn't sell to anyone.

All I can say is forget about the Bear.

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