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Dow, S&P 500 mount surreal pre-Easter rally Thursday, NASDAQ pops

Written By | Apr 2, 2021
pre Easter rally, bullish, inconclusive, dazed and confused, Dow rallies, trade war

Cartoon, “Wall Street bubbles – Always the same”. American financier J. P. Morgan is depicted as a bull, blowing soap bubbles for eager investors. Several of the bubbles are labeled, “Inflated values.” Public domain image from US Library of Congress (LOC) via Wikipedia entry and caption under “Market Trend.”

WASHINGTON – As it has all this holiday shortened trading week, the US stock market continued its surreal, halting, but ultimately genuine upward trajectory Thursday. All three major averages closed at or near 2021 highs during this week’s late, pre-Easter rally. These continuing 2021 rallies keep breaking all-time records for market averages. In fact, the currently beleaguered NASDAQ, home to the bulk of the most popular tech issues, even staged something of a comeback. Maybe it will eventually climb back into record territory as well.

Why is this surreal? The bulls are loving the action, more or less. But why is this happening in light of the Biden administration’s relentless cancellation of nearly everything that ignited the 4-year Great Trump Rally? Honestly, I don’t know. But there it is.

Was this pre-Easter rally a head fake?

I’m worried about Mr Market when he gets back to action next week, the Monday after this year’s Good Friday-Easter Weekend spring break. But we’ll see what happens this weekend, besides absurdly limited church services – courtesy of Lockdown: Year 2 – and who knows what other terrible things we’ll see on the news. (Or what passes for news these days.)

The big news item ending last week’s market action was the Biden interregnum’s “American Jobs Plan.” That plot plan, like the current “stimulus” legislation and like the fake Obama “stimulus” plan of 2009, will involve way more massive taxpayer payoffs to Democrat-Socialist supporters than it will provide support for “shovel ready” American jobs. Is this just another Democrat head fake?





Also Read: 2021: Wall Street’s Year of the Swashbuckling Jackasses


The Biden junta’s latest Porkulus Package

In a Thursday report, Fox Business fairly characterized what we’re seeing as we peruse this administration’s massive and economically destructive “Porkulus II” package.

“The Biden administration says its so-called American Jobs Plan will be a ‘once-in-a-century capital investment’ in U.S. infrastructure that will create millions of good-paying jobs that positions America to  ‘out-compete’ China.”

Yeah, right, it will create few if any new, “good-paying” jobs, while out-competing China only in the amount of grift and graft earmarked for those individuals and businesses that helped throw the 2020 election to our current figurehead president.

“Bank of America notes the biggest beneficiaries will likely be industrial and material stocks.”

Okay, that’s good, we’re already in a few of these. BTW, we’re still making money, inexplicably, on the oil-patch stocks we got at bargain basement prices last fall. Go figure. It’s harder and harder to make sense of this market. Unless, maybe, we “follow the money,” as Deep Throat once suggested to Woodward and Bernstein.

“The $2 trillion plan will be entirely funded by Biden’s proposed Made in America Tax plan that would hike the corporate tax rate to 28%, up from 21%, and increase the minimum tax on multinational corporations to 21%. The increase in the corporate tax rate would partially undo former President Donald Trump’s tax cut, which lowered the top corporate rate from 35%, among the highest in the world.”

Did traders gunning this week’s pre-Easter rally know what else was coming this week?

Everyone already knew something like this was coming. Electing Democrats always means substantial tax increases in all sectors, including individual taxpayers, since they’re the ones that, as always, will primarily bear the burden of these increases. Except the Dems never tell them back until their paycheck withholding numbers drastically cut their weekly or monthly wages, just like they saw under Obama.

Why big business puts up with this is beyond us, because… oh, wait! They just raise their product prices. Which means that the average taxpayer, whose own taxes just went up, now get to pay inflated consumer prices to pay for the corporate tax increases. It’s like Lucy and Charlie Brown and the football. Charlie never learns. Neither do the voters, apparently. Or at least the voters they created last year in Philly, Detroit, Milwaukee, Atlanta, and very likely elsewhere.

Unfortunately, given that most folks have already adjourned for the weekend, there’s no point in continuing today’s rant, since anyone actually reading it will get canceled. So let’s look at specifics.

Finally, some good news in the tech sector?

Likely positive action next week may finally return to the tech sector for real, given that the chipmakers, among others, are bound to ramp up spending and ultimately sales of all those “critical” chips we’ve been hearing about since 2021 began. The Technology SPDR ETF (NYSE:XLK) finally began trading above its 50-day average line, looking like it might successfully test its March highs. Semiconductors are leading the way, as evidenced by another ETF, the VanEck Vectors Semiconductor ETF (NASDAQ:SMF).




… And the semiconductor stocks?

Pre-Easter rally stocks likely to continue benefiting from these bullish tech indicators, or already doing so, are a trio of the usual suspects. Namely, Applied Materials (NASDAQ:AMAT), Lam Research (NASDAQ:LRCX), and KLA Corp. (NASDAQ:KLAC). All three hit 52 week highs on Thursday. I’m not in any of these, and I’m afraid to chase them at this point. But any  selling spree in these issues could get me inspired to try once again. Maybe the tech-heavy NASDAQ is about to revive.

Big, Dow Jones-like stocks may also be attempting a comeback next week, all things considered. But again, Monday could be treacherous. Trading is usually thin on a holiday-shortened week, and sometimes stocks don’t tell true stories during these situations.

How about that March jobs report? Reality? Or another head fake?

On the other hand, the government issued its monthly jobs report, which indicated that nonfarm payrolls jumped by a big 916,000 jobs in in March, while the unemployment rate declined to 6%. The estimated job numbers for January and February were also corrected upwards.

You never know any more whether administrations goose these numbers or at least massage them, particularly to make incoming administrations look better than their predecessors. But, as repressive Blue States finally begin to emulate their more successful Red State competitors by opening their nearly-destroyed economies back up, maybe things have begun to change.

But if things are changing, count on the current socialist administration to get its hands on every last dollar. It will to pay off their friends and reverse the gains of the Trump years. Except for themselves and their friends.

Encouraged by Thursday’s refreshing pre-Easter rally, we remain pretty much all-in in this market. But we also remain watchful. Democrat administrations always have a way of killing off the US economy, one way or another. We’ll just have to see how that will happen this time around.

Meanwhile, best wishes to those Americans still willing or able to celebrate Easter this year. A happy and blessed holiday to you all. I’ll see you all back here likely on Monday.

 

 

Terry Ponick

Terry Ponick

Biographical Note: Dateline Award-winning music and theater critic for The Connection Newspapers and the Reston-Fairfax Times, Terry was the music critic for the Washington Times print edition (1994-2010) and online Communities (2010-2014). Since 2014, he has been the Business and Entertainment Editor for Communities Digital News (CDN). A former stockbroker and a writer and editor with many interests, he served as editor under contract from the White House Office of Science and Technology Policy (OSTP) and continues to write on science and business topics. He is a graduate of Georgetown University (BA, MA) and the University of South Carolina where he was awarded a Ph.D. in English and American Literature and co-founded one of the earliest Writing Labs in the country. Twitter: @terryp17