The GamePlan, II

Friday was a repeat of Thursday. Stocks made a nice move higher in the morning and then lost in the afternoon. This type of intra-day reversal often opens the door to the sellers to take stocks significantly lower. But that didn’t happen. 

Instead, we just saw the S&P 500 test the 1,165 support/resistance point two more times. This action suggests the rally still has some upside potential, even though it’s moved in practically a straight line since early February.   

Now that all parties appear to have agreed upon an aid package for Greece, it will start raising the $71 billion it needs to get through the year. Greece is selling 7-year notes at 6% interest.  

Surprisingly, European economic confidence rose to its highest level in two months in March even as Greece was twisting in the wind. Despite all the drama, some form of aid to Greece was forthcoming. And the recent weakness of the euro appears to have helped export economies like Germany.   

As you know, a rally for the euro against the dollar was one of the catalysts I was looking at last week to take U.S. stocks higher. It appears that catalyst may finally be taking hold this week.   

Oil is already trading higher. And the fifth consecutive monthly gain for consumer spending will help. You can’t help but notice the strength of retail stocks lately.   

But the most important economic data comes this Friday, when we get the Nonfarm Payrolls number.  

Investors are convinced that employment picked up n March 29, 2010. The market is expecting jobs gains of 190,000. And given the rally we’ve had, this number better not disappoint.   

Chinese automaker Zhejiang Geely announced it is buying Volvo from Ford (NYSE:F) for $1.8 billion over the weekend. No doubt this is good news for Ford. But it also points to the growing importance of Chinese investments around the world.   

There’s been a lot of heated discussion about China keeping its currency artificially weak. And the observation has some merit. China’s de facto peg to the U.S. dollar does keep the yuan lower than it might be if it traded freely on the open market. 

Of course, labeling China “currency manipulator” and slapping across the board tariffs on Chinese goods is not the answer. Market forces will take care of China’s currency in time. And increased foreign investment by China will speed up the timeline.   

I expect to see more direct investment in U.S. assets in the months ahead. China is flush with cash and it will put that cash to work. Pay particular attention to the U.S. commercial real estate market.

This is your last chance to join Energy World Profits at a 50% discount to the regular subscription price. This offer will be good until 6 pm today.   

I just added two small domestic oil and gas companies to the Energy World Profits portfolio. I’m expecting each stock to make a 20% move higher over the next couple of weeks. So if you’re ready for cutting-edge analysis from renowned energy economist Gregor Macdonald and market-beating stocks from yours truly, you can sign up for Energy World Profits HERE.