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Dow Jones Industrial Index Rally: “We may yet end the year with a 5% gain.”

Posted November 28, 2007

“Today’s rally was an impressive event. Add in Tuesday’s gains and you’ve almost matched the gains from August 16th and 17th. But back in August, the market was sitting at this exact same tension point.” — Adam Lass

by Adam Lass, TFN

Baltimore — (TFN): The cavalry has ridden in – all the way from Adu Dhabi and armed with $7 billion in bailout money. IIs the big bad financial crisis of 2007 officially over yet?

According to the gamblers over at the Fed Futures pit, the next meeting will bring us another 50-basis point rate cut. Word from the NYMEX pits has crude oil almost $10 off its recent highs. We’re talking a mere 90 bucks a barrel now — so inflation has been whipped too! To top it all off with one big old cherry, the Dow just put in a 331-point day! Pass me a Dixie cup of Cold Duck and let’s revel in the warm glow for a moment.

But let’s put today’s rally into perspective: On Monday, the S&P 100 closed at 657.79 — 2007 was officially in the red by about 3 points. Two days later, we are popping champagne corks over an annual gain of 3.94%.

I will be the first to admit that today’s rally was an impressive event. Add in Tuesday’s gains, measure it low to high, and you’ve almost matched the gains from August 16th and 17th of this year. But back in August, the market was sitting at this exact same tension point. We were down 3% on the year, when the Fed rode in on a White Horse waving a 50-basis point rate cut.

The markets loved it — for a while anyway. It even put in a rally to a new all-time high. Now we are right back where we were in August. Except oil costs more, inflation is worse. GDP growth not bad if you believe the Commerce department. But the Fed has 75 fewer basis points to work with.

Maybe the market will respond with another 40 or 50 points. And maybe, just maybe, we can hold onto that gain through December. After all, there are hardly any work days left, and America will spend most of them either drinking or shopping.

If all these “maybes” align just right, we could actually close out 2007 – the year we hit four new all time highs – up almost 5%!

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Posted by Adam Lass · Filed Under News that Matters 

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