September 16th Edition

Good Morning All,

The S&P 500 closed above 1050 last night. This powerful advance has led Asian and European markets higher in what North Americans refer to as "overnight trading". Our often-expressed initial target of 1060 will likely be exceeded at the opening bell, and after allowing for some momentary profit taking, markets should begin their march toward 1200. This will not be a long trek; it will more closely resemble a rocket launch. It is my belief that the little duckies have successfully aligned themselves in conjunction with interstellar activity, sunspots, phases of the moon and any number of Nostradamus' predictions to set the stage for a sharp, strong advance into early October.

Actually folks, I don't really believe that markets act in either an orderly or a random manner; and I certainly don't believe that forces unknown to us have any influence on market behavior (unless of course we are talking about rogue bankers). What I do give credence to is my oft-stated view that bears hold cash they must invest, and that bulls hold stocks they must one day sell. The only question to be asked is; how many are in each group? The answer, as posited in my previous treatise, is thus: the bears who have missed the 50% market gains that were triggered in March must now spend their cash, and they will do so in a hurry. So enjoy the ride and be ready to depart the scene as we approach either 1200 or the second week of October.

Although traders must remain nimble, longer-term investors may rest assured that the five year up cycle has begun in earnest. The signal may have been given by the recent renewed interest in stalwarts such as GE and Alcoa. The tech rally is still game one but own some commodity based stocks including gold. Many have been mentioned in previous letters at much lower prices.