9:05am (EST) 

“The market can stay irrational longer than you can stay solvent.” – John Keynes

From time to time, we often look at our classic quotes that we have posted to remind of us of things that often get overlooked in the market.  This was the theme for yesterday’s action as the short-sellers got hammered.

Much of the water-cooler talk on Friday was the fact that a lot of traders were betting on a huge drop in the market on Monday and took short positions ahead of the healthcare vote.  Problem was, they didn’t factor in the bulls resiliency.

Despite a pretty steep pullback at the open, the market battled back and stayed positive for the rest of the session.  While many pencil-pushers “predicted” that reform would be a negative catalyst going forward, the market seemed relieved to see some of the uncertainty surrounding health care lifted.

As a result, the Dow added 44 points, or 0.4%, to finish at 10,785.  Once again, the index managed to break through our 10,800 target but was unable to hold this level.  A close above this level clears the way for Dow 11,000.

The S&P 500 gained 6 points, or 0.5%, and closed at 1,165.  It was important for the index to hold 1,150 and we did but short-term resistance remains at our intermediate target of 1,175.  A close above this level could carry the S&P to 1,200.

And finally, the Nasdaq came back to life as it added 21 points to settle at 2,395.  The index touched our near-term target of 2,400 last week and traded to 2,401 on Monday.  A close above this level could take Tech to 2,500.

This doesn’t mean we aren’t looking over our shoulder as we are well aware that the bears can strike at any given moment and with force. 

Irrational markets, which do not accurately reflect the true values of some companies, can stay irrational for long periods of time and at some point valuation will matter for stocks trading at high multiples.  We might be seeing a little of that come into play in some sectors, but overall, the trend is still up.

One stock that that will be getting a “valuation” look today is Google (GOOG, $557.50, down $2.50).  The company stopped censoring its Web search and news services in China and Wall Street is busy this morning figuring out what it all means.

goog032310

To start, the company still has a “presence” in China.   Google is redirecting people who visit its Chinese site, Google.cn, to an uncensored Chinese-language version of its service hosted in Hong Kong.  They also said they would continue to host their map and music search services in China and hopes to keep its sales and research operations there.

It was a savvy move by Google but is it a good one?

As we head to press,  the Dow futures are up 3 points while the Nasdaq futures are fractionally higher.  The S&P 500 futures are off by less than a point.  We could have a “soft” open this morning but many of the stocks in our portfolio are showing a higher bid.  Subscribers, check the Members Area for the updates.

]]>