What A Day...Can't Get Much Better...

The market came out of the gate strong and continued its upward trajectory throughout the day. There was a brief pause during the lunchtime hours but additional gains were made later in the day and all of the major indices closed on or right off their session session highs.

At the end of the session the Dow was up 235 points or 2.85 %. The broader based S&P closed with a gain of 26.83 points or + 3.04 %.

After last week's decline today's market performance was rather dramatic. A good portion of last week's losses were reversed today. The S&P is now again positive for the year.

Market participants quoted the rather spectacular win of the reining party in India's parliamentary election as one of the main reason for the market to jet higher. The Indian stock market gained a very solid 20 (yes...twenty) percent today.

The strength in the Indian market propelled all emerging markets up and, by extension, led to a global rally.

There was no other economic report released today so the market started feeding on itself pretty much from the opening minutes. Momentum pushed prices higher throughout the day and there was never a real attempt to stop the advance.

I do not want to be a cynic but I have to say it...I fail to see the justification for today's advance in the Indian stock market. It might be that we are witnessing one of those cases that any excuse is good enough to buy stocks. If that is the case then the market can only go up further from here.

I have to admit...I did not expect an advance of this magnitude. I have been neutral stocks for two weeks now (albeit with a negative bias). The strong advance suggests that further gains are likely. As such there seems to be a good chance now that new highs will be made.

However...markets tend to do the unexpected. If the market is unable to build on today's gains and instead starts reversing down (i.e. later this week) we might have set ourselves up for a true washout and a bigger downside move.

It looks like we are in for an interesting week. From where we closed today the market might very well make another big move. Let's see what happens.

Yours,

Steve Benger