Finally

I admit to having some real reservations about the trillion dollar ante made today by Mr. Geithner. But in the spirit of "It's not what I think, it's what I see" I have to say today was a nice day. It was the first day with a close above the 50 day moving average in a number of areas. The S&P, the Nasdaq, EAFE, Emerging Market and commodity indexes all closed above what has been a brick wall. We've begun taking partial allocations in number of positions.

For all the positives of today, the markets are now overbought and can remain so indefinitely. The trend of lower lows and lower highs is still intact, but the positive internals along with the unprecedented treasury stimulus makes us more constructive than we have been in many many months. We are moving clients back toward long term strategic allocations while reducing some of the more defensive positions.

One day does not a bottom make but who can deny that fighting the tape rarely makes sense. The market finished strong without the profit taking I had expected to see late in the day which bodes well.

The S&P 500 has not had a 5% advancing month since December 2003 but month to date the S&P is up 13%. Clients should be coming back in from the cold and unwrapping.

John Barnyak
President
www.stonehouseasset.com