Stock Market Commentary for Thursday, May 5, 2005

The market will take another couple of days to stabilize after the FOMC announcement.  There were lots of little tidbits of news on Wednesday, but nothing so overwhelming as to be a primary catalyst for the rally.  Nasdaq's very sharp 29.16-point gain was nice, and in fact confirms the new up-leg off the intra-day low last Friday, but it's difficult to gain much consolation from a sharp move only a day after an FOMC announcement.  It will take another week before the trend becomes clear, but for now the rally looks halfway decent.

The news about Kirk Kerkorian's plans to take a bigger stake in GM (GM) did help to boost market sentiment, but by itself wasn't a cause for that much enthusiasm.

The economic reports were mixed and rather lackluster, so they weren't the excuse for the rally, other than possibly being not as bad as some might have expected.

There does appear to be a sense that the crude oil rally has run out of steam, but that may be temporary.

Nasdaq trading volume was moderate (1.92 billion shares), and breadth was strongly positive, with 2.19 gainers for each loser. This was a half-decent rally, but trading volume was rather light to consider it a strong rally.  The fact that trading volume was not heavy on such a sharp gain is a moderate yellow flag.

Click here to read the entire column.

-- Jack Krupansky