Stock Market Commentary for Friday, May 20, 2005

Thursday was mostly an in-between "treading water" trading session as momentum traders struggled to judge whether the rally still had legs or was poised to reverse.  Apparently there was enough lingering positive sentiment to keep sentiment biased to the upside, with Nasdaq gaining a moderate 11.93 points.

The economic data was mixed, which is no real change.

Unfortunately, the latest weekly report shows that there was a net outflow from domestic equity mutual funds, so there's a significant chance that a significant portion of the recent run-up may have been due to "hot money" rather than real buying, which means that this hot money could turn on a dime and leave the rest of us high and dry.  It's also possible that recent weakness in commodities speculation has left stocks as a more attractive speculation.  We'll have to see how this plays out.

Nasdaq trading volume was light (1.74 billion shares), and breadth was moderately positive, with 1.21 gainers for each loser.  This was not a strong rally.

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-- Jack Krupansky