We got an easter egg...

Yesterday I was talking about a stronger opening today and we sure got it. The market opened higher across the board and blew through last week's high pretty much immediately. We made a new weekly high and the Dow finally closed on its highs of the day, the highs of the week and the highest level since the beginning of this upmove which started 4 weeks ago. At the end of the day the Dow closed with a plus of 247 points or + 3.16 %

The 7980 area has been a key area for me. The fact that the market broke through it to the upside as well as the fact that all of the major averages managed to post comparable gains indicates to me that we will see another leg up now.

I expect 8250 in the Dow and, as a secondary target if 8250 is overcome, 8450 to 8500.

The driver for today's advance was Wells Fargo's announcement of a 3 Billion profit for the 1st quarter of 2009. The number was well above analysts expectations and lit a fire under stocks even before the opening.

Today's advance was once again on low volume due to the Easter weekend. The real test if this rally has legs will come Monday/Tuesday next week. If volume picks up and we manage a positive close...then we are heading higher.

I believe we will head higher but I also feel compelled to issue a word of caution. The recent rally has been historical as far as how fast and how far we moved away from the bottom posted March 9th. (a once in 75 year rally to be precise)

Stocks cannot continue like that indefinitely...we will run into headwinds at one point and I believe there is a very good chance that one point we will see a prolonged sideways move and/or correction until fundamentals become a bit more clear.

In closing...I expect stocks to head higher with the Dow now targeting 8250. My current positive view would change to neutral / short term bias down if the Dow brakes below 7750. A close below this level would indicate at the very minimum a short term reversal of the current uptrend with a potential decline to the 7150 area.

Happy easter Holiday Weekend,


Steve Benger
PS: Bear in mind...stock market is closed tomorrow.