US stocks rise and put the DOW near the high point for 2009. Government socialists have lost their timing.

Some policy makers are concerned that the ECB’s emergency lending to banks could fuel inflation once the economic recovery gathers steam. Treasuries were mixed after the FOMC's decision Wednesday to leave rates unchanged at 0%-0.25% and maintain stimulus plans. The U.K. boosted its economic stimulus, while the European Central bank left rates unchanged.

The dollar index was lower. Gold futures were higher, pushing toward $1,100 an ounce. Crude oil futures were lower. Central banks around the world are starting to wind down some of the measures introduced to stave off a second Great Depression. The Bank of England said today it will slow the pace of bond purchases and the Federal Reserve yesterday outlined the conditions needed for it to raise interest rates. The phasing out of long-term loans is likely to be the first step in the ECB’s exit strategy by winding down liquidity operations. Some policy makers have expressed concern that the economy remains fragile and may want more evidence of a recovery.

This week,
U.S. stocks were higher Thursday following reports that weekly initial jobless claims fell 20,000 to 512,000 for the week ended Oct. 31, while continuing claims fell 68,000 to 5,749,000; and that third-quarter nonfarm productivity soared by a more than expected 9.5%. We are cautious though because the unemployment compensation bill has not passed and many unemployed have fallen off the records over the last two weeks. That makes the continuing claims deceptive and if the bill passes we will see a spike upward with the unemployed from two skipped weeks coming back on board. The socialist politicians have lost their timing touch. Their little unemployment deception effort was two days late and therefore two late to help their disaster in the elections this week. The figures should spike in two weeks or approximately one week and two days after they pass the Unemployment Compensation Extension bill.

The Institute for Supply Management reported on manufacturing activity 55.7% up from 52.6% last month.
September factory orders up.
Kraft posted wider profit margins exceeding forecasts.
Time Warner profits exceeded forecast and gave an optimistic guidance.
Health insurer Humana reported higher profits and optimistic guidance.
Ford reported a $billion profit last quarter.
Chrysler reported they stopped hemorrhaging this last quarter.
The FOMC did not raise interest rates at this time. Bank of England followed suit over night easing credit.
Major retailers reported same-store sales for October benefited from the recovering economy.
Worker productivity improved again.

Today Friday, Nov 6 AM
Investors will wait anxiously all week for a labor report to be released 8:30am Friday that will likely show U.S. unemployment topped 10% during October.


Market forces November 6
The market rally started but if a new high is not established we expect a few months of declines will follow. We would be prepared to diversify more as the market rallies.

Asian markets were mixed last night; China up 0.3%, Hong Kong up 1.6%, India up 0.6%, Japan up 0.7%, Seoul up 1.3%and Taiwan up 0.6%.

European markets are flat with the average in a range from -0.1% to -0.2% this morning about half way through their day.

US pre-market futures are up 0.1% again today at 7:00 AM EST with the DOW above 10,000 again.

At the start of a rally, often buying in some stocks will vastly exceed selling resulting in a price spike. If you are lucky to have one of those spiking stocks you need to take advantage of it on the day it happens. By the next day the opportunity is lost.

Our indicators say we are near the top of the market for perhaps the next six months. That is to say we expect that although the averages may not show it, our cash flow index indicates that cash has been leaving the market for almost two months and that puts a spin on things. For instance, even if we slightly exceed the markets previous high of the last month it will still be a head and shoulders sell formation for us. The market now has to surpass the previous high by about 0.5% (at this time and still increasing) to maintain a bull market. For that reason we will be prepared to go into cash gradually now by just taking profits and not re-investing in the market over the next three weeks and by then we will know if this rally still has legs. The buying window has shut again for us but if a substantial new high is made and the next decline is less than 5% we will go long again. If however the next low show continued cash flow erosion we may stay in cash.