Great Start For the Week!

Wall Street wasted little time in recovering from its worst week in two months as the Dow climbed more than 130 points Monday afternoon amid a flurry of M&A action. The markets were taking their cues from the merger news as Xerox (XRX: 7.2799, -1.7501, -19.38%) inked a $6.4 billion deal to buy Affiliated Computer Services (ACS: 52.41, 5.17, 10.94%), Abbott Labs (ABT: 48.681, 1.341, 2.83%) bought a drug business for $6.6 billion and Johnson & Johnson (JNJ: 61.305, 0.645, 1.06%) acquired a $444 million stake in biotech company Crucell (CRXL: 22.35, -1.35, -5.7%).

The Dow was led higher by DuPont (DD: 32.6383, 0.8683, 2.73%), General Electric (GE: 16.7949, 0.3949, 2.41%) and Cisco (CSCO: 23.7104, 1.0904, 4.82%). All 30 blue-chip stocks were in the green but financial-related stocks like American Express (AXP: 34.04, 0.96, 2.9%) and Bank of America (BAC: 16.9194, 0.2694, 1.62%) saw more modest gains.

The early bullishness on Wall Street comes after the markets closed lower on Friday, marking the first three-day slide for stocks since early September. After a relatively resilient month, the markets have run into resistance in recent days amid disappointing economic reports that have led some to question the bulls' economic optimism. In fact, last week marked Wall Street's steepest pullback since early July as the Dow lost 155 points and the S&P 500 slid 2.24%. Still, the Dow is up 1.78% in September and more than 10% year-to-date. But the markets are well on their way to making up most of those losses as traders cheer the M&A activity, which until recently had all but dried up. The increased M&A activity has some traders thinking, “Well maybe there is indeed some value here and the growth prospects are a little bit better,” said Nick Kalivas, vice president of financial research at MF Global. “I think people have taken the secondary issuance as a sign that stocks have poor valuation. I think these M&A deals neutralizes that argument."

We'll see how things hold up for the rest of the week.

Stock Market Takes a Break

Stocks opened lower today and are expected to level off for the next 1 or 2 months. Bob Parker of Credit Suisse says to look for the bull market to return by August. (See his comment and link to video interview at:

http://www.cnbc.com/id/31168544


Frankly I'm kind of glad for a break in the run we've been having. Gives me time to pick up more stock at bargain prices. I've taken some profits lately and am looking to position myself for the next leg of the bull market. Technically we are still in a bear market, but there are always bullish periods within bear markets. Since the economy is not expected to fully recover from recession until the final half of 2010, it's likely that there will be volatility and a continued bear market until then. Gives forward thinkers plenty of time to position themselves for a true bull market at the end of 2010 or beginning of 2011. In the mean time, why not take advantage of the current market by buying on the dips and selling on the highs.