STOCKS & COMMODITIES:

During the "Bubble" in the late '90s some analysts equated parabolic Internet stocks to Commodities, as Fundamental Analysts changed their Earnings Growth parameter to "Future Earnings Growth"; now it seems that the stock market is indeed a market of Commodities after all, as the leading Industry Groups lately are Oil, Steel and other Industrial metals, Gold, even Uranium, and as of today, Dr. Copper. Whoever the leaders, the recent rallies - at least of big caps - have again failed at recent high levels again; the best hope would be a higher low and an upthrust to new highs on large Volume provided by M&As reducing shares;add corporate cash and sluggish Bonds, and IRA/Pension money.
The weekly Sentiment Indicators are certainly cooperating, remaining in neutral across the board, except for a Bullish AAII survey reading of 31.8% for both sides.

CYCLE-ANALYSIS:

A recent IBD chart illustrated the difference between Buying $10,000 of the DJIA from Nov.1 to Apr.30 ( and switching to Treasuries for the remainder of the year) versus Buying the DJIA from May 1 to Oct.31. The resulting returns over the last 55 years were $492,060 and $9,682 ( or a $318 loss), respectively! Guess what? We're almost there; and the average Bull market of around 3 years is well into the third year, and looking a little tired lately.
The Advance/Decline on the NYSE went negative for the first time in awhile; the complacent VIX is at another new recent low of 11.1; Nasdaq Volume to NYSE is about at parity; but most spectacular of all was the change in the Public to Specialist Shorting ratio down to 1.18, from 1.96 a week ago. This narrow range saw .69 as its 5 year low in March, '00 - a secular top - and a high of 2.58 at last August's low. All other Indicators fall within normal range.

FEBRUARY EFFECT:

A delayed "effect" brought us to new highs for the year today, and no Indicators seem to be overextended. In fact, volatility is at recent lows with the VIX at 11.4, the Semis and gold's XAU also benign. Although the Nasdaq has been weak, with techs out of favor, the NAZ Volume rose against the NYSE to 139% last week. Hopefully the upward trend will hold and get us to Walter Bressert's 20-week cycle target of 1260-1320 on the SPX. We also hope that foreigners' reversed reluctance to buy both stocks and bonds last month will get back on track.

IT'S GOOD TO BE ON THE SAME PAGE,:

but make sure you're also in the same book!
With the Dow's 300-point rise last week, off of the retest of the old Trading Range of '04, most Sentiment Indicators have quieted down for the nonce. The market upswing lulled the VIX to a recent low of 11.2, much like the multi-year low on Volatility on the Gold Index, the XAU, as the Dollar starts to rally thanks to the kindness of foreigners purchasing our Treasuries. Last week's 4:1 NYSE Advance/Decline ratio and 20:1 New Highs/New Lows bode well for a continuance of this direction.