Thirteen Thousand Three Hundred Thursday?

A nice open seems virtually guaranteed this morning and we should blow past my 13,250 target.

As long as we hold it I will be very happy and the Big Chart lists 13,300 as our "Comfort Zone" for the Dow, who had been our leader on this leg of the recovery but was leapfrogged by the Nasdaq, who shot right over 2,550 with a mighty 31-point jump, led by 3 of Cramer's 4 Horsemen; AAPL (+3.9%), AMZN (+1.3%), GOOG (+1.2%) with RIMM holding steady at a ridiculous post-split $81.81.

As Option Sage mentioned in his excellent post on the Horsemen last month: "The bargain of the group based on P/E multiples and projected EPS growth would seem to be Google.  Google trades at a multiple of 45 and a forward multiple of just 27 despite EPS growth projections of 30%."   That was July 24th and Sage predicted further pullback but we've been picking up Google calls as our 2nd favorite tech play (no points for guessing our favorite – too easy!).

There can be no real rally with Google below $525.  I won't get into all the reasons here, it's a whole article in itself, but 2008 gives us a Presidential election, the World Cup, Winter and Summer Olympics – it's the Superbowl of advertising, which is where Google derives the majority of their revenues and they have been firing on all cylinders lately so we can expect a string of record numbers going forward.  Also, I was fascinated last night by the World Clock (thanks to Windywheel), which shows an absolutely astounding minute by minute increase in Internet Access Points as they are added 15 times faster than people are being born!  In a single minute over 2.000 new web connections are formed and that bodes (or should I say "nodes") very well for the on-line marketplace.

I've been talking about how the CB's have stepped up to bail out the rich folks before they suffer the anguish of  a market pullback and the BOJ stepped up to the plate today and reversed their decision to hike rates at this meeting.  Japan's Governor (who's name you will never hear on TV or Radio) had previously stated that the bank was determined gradually to close the gap between Japan's extremely low interest rates and those of the rest of the world, which was unwinding the carry trade ahead of this meeting.  Now Mr. F says: "It may be too late if we wait until every piece fits into a jigsaw puzzle to conduct policy,"  He added that if expectations for an easy policy were prolonged, economic and financial activities could be over-stimulated, resulting in big swings in the economy.

Gee, do you think he means big swings like the Nikkei falling from 18,268 on July 13th to 15,273 on Friday and back to 16,316 today?

I have already warned that if our government pursues Asian-style Central Banking policies they will subject our markets to Asian-style market swings but they continue to exert pressure on the Fed and I can assure you, after listening to Chris Dodd's interpretation of his meeting with Paulson and Bernanke, that the government is CLEARLY playing with forces that they DO NOT understand! 

The Fed can not, MUST NOT lower rates.  There are two excellent articles on the subject; one by James Picerno relating to the meeting and on by Barry Ritholtz, who lists "5 Reasons the Fed Won't Cut Rates".  I strongly suggest reading those and it has the added benefit of letting me move on with the morning post..

So – Woo Hoo!  Party time in Asia (although not India, as forecast by Msquare yesterday!).

The Nikkei jumped 415 points as the BOJ held off a much anticipated rate increase and the Hang Seng amazingly added yet another 620 points, both indices finishing up at the 2.5% rule which indicates follow through tomorrow (hence my FXI roll).  The BSE took a mild 84-point dip but held our 14,100 comfort level so it's "party on" in the Far East wing of the planet.

Europe seems to be adopting a slightly more reserved attitude this morning, up a little over half a point but coming off their opening highs.  It is disturbing that the DAX was rejected near our comfort zone of 7,600.  As I said last night, both the CAC and the FTSE have a long way to go to regain our confidence and we have to be VERY concerned about a rejection of the DJ World Index at this level!  We'll make the call in intraday comments but I may want to take some more profits off the table and shore up our defenses if we don't get the follow through we need from the World's leading economy.

The ECB is NOT looking to forestall their planned rate increase on Sept 6th as they are still much more concerned about inflation than bailing out people who bought at the top – damn socialists!  In a statement, the central bank said "the position of the Governing Council of the ECB on its monetary policy stance was expressed by its President on 2 August 2007." At that time, ECB President Jean-Claude Trichet said the bank would exercise "strong vigilance" against inflation risks. The phrase is the bank's standard expression to indicate a rate rise in a month. 

So it's up to us to carry the torch.

ANF had good earnings but is getting a warm reception at best while HOTT had a miss and is getting the cold shoulder.

We would hate to see $70 oil and we would hate to see gold running up and the dollar falling today.  We want to see money going into stocks, not stuff…  Dow 13,250 is a critical hold while 13,300 will let us put a little more cash to work but not without confirming with AT LEAST 1,470 on the S&P, 2,550 on the Nasdaq, 490 on the SOX, 800 (and that's being generous) on the Russell and 9,400 on the NYSE.

If we cannot make these levels and if Europe starts to weaken then this party may be an early bust so let's be very careful out there!