Dow Rockets to Another New High; Other Indices Lag

The Dow made another in an ongoing string of records on Tuesday, gaining 73 points to surpass the previous record (set this past Friday) by 16 points. While the Dow has been enjoying a terrific ride, the other indices - especially the NASDAQ - have lagged, as they did today.

The Dow was at least twice as good on a percentage basis than any of the other indices, making the case that the 30 blue chips are still considered a safe bet in an otherwise turbulent marketplace. Only 7 Dow stocks closed on the downside, most notably Proctor & Gamble (PG), which was bid up yesterday, but dumped today upon the release of the company's 1st quarter report. P&G turned in profits of 74 cents per share, as opposed to 63 cents in the same period of 2006, though the number was short of analysts' expectations and the stock sold off 1.57 on Tuesday.

Dow 13,136.14 +73.23; NASDAQ 2,531.53 +6.44; S&P 500 1,486.30 +3.93; NYSE Composite 9,639.79 +12.06

Advancers led decliners by a slight margin, with just 150 more issues higher than lower. There were 213 new highs and 150 new lows, the closest those have been in more than three weeks.

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The trend is clearly in place for a broader pullback, as evidenced by the internals and yesterday's partial sell-off.

Perhaps the only reason the indices closed higher at all was the lower prices being bid for oil, which closed down for the second straight day. Light crude for June delivery fell 1.31 to $64.40, though the price would have to fall below $60/bbl. and settle there for any realistic relief for both consumers and businesses.

Following that lead, Gold was off 6.20 to $677.30, while Silver lost 21 cents to end the day at $13.37.

At this point, record high closes on the Dow are becoming so commonplace as to lose impact. The run of the blue chip companies has not nearly been matched by the NASDAQ or the S&P 500, reflecting a more challenging environment for mid and small-cap stocks.

The risk of a significant downturn grows with every uptick on the Dow. Buying high is not normally a good idea and it probably isn't at this juncture.

Storm Clouds Gather: Dollar Down, GDP 1.3%

There's a palpable disconnect between what's hot on Wall Street and the realities of the US economy. While the Dow makes new highs day after day, extending one of the longest bull markets (55 months and counting) without a 10% correction.

Corporate profits are the drivers of the current rally which has taken the Dow on a 1000-point ride upwards over the past two months and the reports have been solid, if not spectacular. The other side of the equation is comprised of economic indicators, the value of the currency, credit markets and mood, may be more forward-looking than a string of corporate pluses and rising indices. Those indicators are forecasting more pain than pleasure, but the market has yet to buy into the argument.

So, is this the last hurrah? Are investors wringing every last cent out of stocks in anticipation of a dramatic reversal, or are investors just confident that US businesses are sufficiently globalized that they will not be largely affected by suffering in the US market alone. At the end of the day, the major indices registered a ho-hum split decision.

Dow 13,120.94 +15.44; NASDAQ 2,557.21 +2.75; S&P 500 1,494.07 -0.18; NYSE Composite 9,705.36 -10.13

While these investors should be applauded for their optimism, the decline of the US economy should have some ripple effect across the spectrum, though the extent of the decline (we may already be in recession) and the impact on various industry sectors is difficult to calculate, much the less correlate.

First quarter 2007 GDP showed a feeble 1.3% growth rate according to the Commerce Department, the lowest quarterly rate since the first quarter of 2003, which closely coincides with the beginning of both the current bull market and the start of the war in Iraq.

It should come as no surprise to anyone that this bull may be on its last legs, especially with the public discontent and debate to end the war sooner rather than later. Bull markets don't last forever, just as recessions aren't the end of the world. As a matter of fact, recessions are necessary and vital parts of a properly-functioning market economy. Expansions build excess and excesses must be wrung out to put the system back on a functional footing.

And who can say that the economy wasn't full of excess? Witness the housing and credit boom of the past five years. That rocket fuel has been spent and house prices are plummeting back to earth while credit qualifications by banks and finance companies ratchet up the pressure. The stock market - especially the Dow - looks like the last refuge for safe money.

Make note of this number: 13,197.50. That's the all-time intraday high (April 26, 2007). We may go past it, but if the market doesn't continue climbing past it over the next week, the summer and fall could be very trying seasons for US equity investors.

Another of the reasons the markets may soon struggle is the high price of oil and gasoline. Crude was up again on Friday, with a barrel for June delivery set at $66.46 after traders tacked another $1.40 to the price. Keeping with the tone, Chevron posted 1st quarter profits of $2.18 per share (net $4.7 billion), compared with $1.80 per share ($4 billion), during the same period last year, an 18% gain, or roughly the same percentage deeper US motorists dug into their pockets to fuel their transports. Lovely.

In currency trading, the Euro reached an all-time high against the greenback of $1.3682, before closing slightly lower, at $1.3650. Barely noticed by the general public, the dollar buys less overseas, driving up import prices on just about everything. The dollar weakness has been evident for years. Easy credit, loose fiscal policy by the government and a huge - and growing - federal debt have made the US dollar lose respect in world markets. The dollar's decline is gradual, but surely it is killing us.

Gold closed at $682.50, up 3.80, while silver ended the day at $13.58, a gain of 12 cents.

Earnings will continue to make headlines next week, but so could some serious profit-taking. Expect a roller coaster.

Dow Rockets 100+ in 2 days; Nasdaq Flirts with 2500

After gaining 87 points on Wednesday and reaching another all-time high, the Dow Jones Industrial Average tacked on 23 more Thursday to close at 12, 765.01. Fueled by positive comments from Fed Chairman Ben Bernanke, stabilizing oil prices and benign economic news, investors poured into blue chips, techs and small caps, extending the bull run begun in October 2002.

The Nasdaq flirted with 2,500 once again on Thursday, closing on the upside by 8.72 at 2,497.10. The junior exchange has not closed above 2,500 in six years and the number it is approaching is an important psychological level.

The National Association of Realtors announced today that overall home prices fell 2.7% in the 4th quarter - a record - while median home prices lost 3.4%. Vacation markets in Florida, Sarasota-Bradenton-Venice and Palm Bay-Melbourne-Titusville, were especially hard hit.

Life may be rosy on Wall Street but not everyone is sharing the joy.

Another Record for the Dow; Exxon, WebEx in the news

Industrial Average Closes at New High of 12,672.96

The US economy seems to be running on high octane. And most of it is coming from Exxon-Mobil. As the Dow Jones Industrials closed at yet another record high, oil giant Exxon-Mobil reported annual profits of $39.5 billion for 2006, the most ever for a US corporation.

For the 4th quarter, the company said it earned $10.2 billion, or $1.76 per share, a slight decrease from year-earlier figures of $10.7 billion and $1.71 a share. Even so, 2006 was a very, very good year to have oil anywhere - in your car, in a portfolio, on your hands, in your blood. Exxon's massive profits translate into more than $75,000 per minute over the course of 2006. They have a good thing going there.

The price of crude, meanwhile, has been dropping and eased off a bit today after a couple days of gains. Futures contracts for March delivery closed at $57.30/bbl. (down .84) on the NY Mercantile Exchange.

Elsewhere, the big tech story was WebEx Communications, the multi-layered internet collaboration service company which returned profits of 42 cents per share - 4 cents beyond estimates - reported after the close on Wednesday.

Additionally, WebEx (WEBX, company home page) laid out guidance for the 1st quarter and the full year in excess of analyst predictions. Shares gapped more than 3 points higher at the open, at 40.55, from a previous close of 37.08 and continued to climb throughout the day. At the close, the stock posted a gain of more than 21%, at 45.03. The company's main product line includes solutions for collaboration, web meetings and teleconferencing via the internet.

The other major indices took their cues from the Dow. The NASDAQ added 4.45, while the S&P 500 ticked another 7.68 points higher. Following a favorable January, February is off to a refreshingly solid start.