Weekly Market Commentary:

It was one month ago Friday that U.S. equity markets heeded the prognostications of most major financial media outlets and put in what was described by Street pundits beforehand as "a much needed correction." Last week's action saw the major indices climb within spitting distance of their pre-correction highs in an impressive show of strength.

The big gainers in last week's trading were the NASDAQ Composite, which added 0.8% (+21) to end at 2,492 and the Russell 2000 adding 0.7% (+6) to close at 819. The big cap S&P 500 gained 0.6% (+9) to end the week at 1,453, while the Dow Industrials managed just a 0.4% (+52) lift. One group of stocks that has not kept up with the month old rebound (and yes, it is still only a rebound until the old highs are taken out) have been most anything financial related.

The main underlying concern these days continues to be anything "sub-prime" related, with even the likes of Dow component General Electric (with a sub-prime unit) not keeping full pace with the recent rally despite a good earnings show last week. The flip side has been Alcoa, another Dow component whose earnings came in higher than anticipated (+9% for the quarter) and has bounced nearly straight back up. The big money, it appears, is going defensive all the way.

We have been left to wonder where all this recent strength has come from (especially with the dollar at two-year lows.) So we just continue to remind ourselves that markets love to climb those "walls of worry" and take it as it comes. That we're reminded daily there are plenty of worries out there is hardly lost on anyone. So let's identify the other recurring themes. Inflation fear, rising food and energy prices, slowing profit growth, "tight money" Fed policy and the sub-prime "spillover effect" are all the usual "risk" suspects. Let's hope these markets can do better than they did, say, twenty years ago October? The closer we get to those April highs, the closer we'll be to an answer which way this market is headed. Until then...

Stay tuned!