Stock Market Commentary for Saturday, July 9, 2005

Although the monthly employment report and a decent quarterly report from Alcoa (AA) (as well as falling oil prices) were nominally the reasons for the nice market rally on Friday, I would surmise that the true reason for the rally was relief that the market responded so well to the London bombings on Thursday.  I suspect that more than a few people remained short on Thursday and were forced to cover on Friday in a classic "short squeeze".  NASDAQ rose a sharp 37.22 points, closing well above the psychological 2,100 level (2,112.88).

Unfortunately, even such a sharp point gain is relatively meaningless given the lightness of trading volume.  This was more of a technical trading move than a durable advance based on true economic and business fundamentals.  The gain may stick, but I'd be cautious about betting on it.

The economic data was mixed.  No new news there.

NASDAQ trading volume was light (1.63 billion shares), and breadth was strongly positive, with 2.67 gainers for each loser.  This would have been a strong rally, but trading volume was way too anemic.

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-- Jack Krupansky