Market Commentary as of May 2, 2008

The Bad News:

• The dollar has been very weak.
• Like the temperature in Dallas, the price of gas continues to rise.
• Housing prices, however, continue to fall to record lows.  Nice summary here.
• Despite the recent rally, the average stock is still 27% beneath its 52-week high.
• And market commentators point out that we are entering a period of negative seasonality.

The Good News:

Somehow the market is finding a way to rise.  It is often tough to remember, yet price is the primary indicator; and it is going up.  That is a good sign, especially during periods of apparent bad news.

This was another solid week for the major Indices, with virtually every index taking out their respective downtrend-lines for the week. Barron's called it the best finish of 2008.

The S&P 500 finally closed above the 1400 level for the first time since early January. If it holds, that upside breakout moved the S&P 500 out of a three-month trading range into an intermediate recovery.  The next major test likely will take place at its 200-day moving average and a trendline drawn over its October/December highs.

Here is a similar chart of the NASDAQ.

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