Oil, Gold Advance...

Oil, which closed just shy of $105 on Friday, has been advancing all morning, and as it again moved to new highs, near $107, S&P futures finally lost some of its momentum. Still, stocks have held up remarkably well: on Friday I noted that oil had advanced nearly 25 percent in the past two weeks or so, while the S&P 500 was down only about 2 percent.

There is a widespread belief that the rise in oil is not sustainable and that the improving U.S. economy will trump all. We'll see.

Today, however, this oil advanceis not helping energy stocks...none of them are among the significant advancers pre-open. That's because the negative impact on the economy from higher oil creates an offset for incrementally higher oil profits.

The one exception: ExxonMobil up fractionally, as Credit Suisse said a price of $100 per share (currently $85) "is not out of the question." They could even do good if oil doesn't stay elevated, because of improved profits in their plastics business and higher margins on upstream production.

Same story with gold , but gold stocks are up .... as gold hits a new high($1,444 an ounce) gold stocks like Goldcorp, AngloGold Ashanti, US Gold, Hecla and even silver stocks like First Majestic Silver and Coeur D Alene Mines are all up 2 to 4 percent, most at new highs.

The dollar continues its relentless declineagainst the euro and other currencies; the Dollar Index is now down 7 out of the last nine trading sessions.


1) This week is the second anniversary of the market's recent lows (666 on the S&P 500—yikes!). Bulls point out that the great advance (95 percent—truly impressive), and that the length of the current bull market (two years ), is not even half the length of the average bull market since 1940. But bears point out that these prior bulls have not had the advantage of the Fed's QE1 and QE2 program.

They're right. We have no idea how much these stimulus programs have distorted the economy...or the stock market. It is not clear that the past is a reliable indicator of the current market, or that the Fed has not itself created a stock market bubble.

2) Hard drive maker Western Digital is buying Hitachi's hard drive subsidiary, Hitachi Global Storage Technologies, for $4.3 billion in cash and stock. Hitachi will own about 25 million shares of WDC (about $750 million), about 10 percent of the company.

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