Friday, March 04, 2005


They say that breaking up is hard to do....

I beg of you, don't say goodbye
Can't we give it just one more try
Come on baby, let's start anew
'cause breaking up is hard to do.
(posted with apologies to Neil Sedaka and Howard Greenfield)

The past few weeks I have played these words on the i-pod stuck deep in my skull at least a hundred times. As the Dow Jones Industrials and the S&P 500 have teetered on the brink of a 4 year break-up, I have been too hopeful. Ken Fisher's piece some months back in which he called for a "melt-up" maybe has influenced me to stir the stew too often. The break-up is coming. My guess is the sideways market cannot last much past summer.

The payroll numbers this morning were just about perfect. A strong number of new jobs with soft workweek and wage gains. Numbers that show the economy continues to grow at a fast clip but no so fast as to raise inflation fears. The price of oil is high enough to provide the market with the proverbial wall of worry to climb.

The Dow and the S&P are fighting to stay above three and a half year peaks. The stock in weak hands is gradually being consumed by strong players. With just a little push, the break-out could be singing a loud tune next week.

Breaking up is hard to do. I will be disappointed if this move is not the start of a significant break-up. However, I can be a patient old cuss. I will keep on buying stocks until I see a good reason to replace them with bonds or cash. Bonds are priced higher than maybe 900 years out of 1000 and the best time to hold cash is if inflation is running unchecked.

For now, I sing the same old song but it will have a different meaning when this trading market is gone. (An I'm sorry to the Four Tops) I may be singing a new song next week.