Stock Rebound Isn’t Quite a Rally

Mix one part oil-price rise with one part low-volume Friday, and you have
plenty of room for another speculative push higher in stocks. Not much of one,
mind you, as tech stocks, especially of the large-cap variety, were sitting this
rally out, spooked by a rare (in fact, has it ever happened?) miss by Google
(NASDAQ: GOOG ). All told, the Dow Jones Industrial Average gained 57 points to
12,342, the Nasdaq rose 4 points to 2765 and the S&P 500 added 5 points to
1320. Away from the large-caps, the bigger story was a return to favor of
small-caps the Russell 2000 Index rose 0.9%. Yet you cant really beat oil
prices aside from the repeatable new highs in gold and silver for a taste of
both the present and the future of financial markets. The bullishness that one
can glean from oil prices moving higher that over the long term it must
represent some sort of sustainable global demand will have its built-in limits.
And the last one came as crude approached $110 a barrel, as youll remember the
retreat from that peak a week ago coincided with one in stocks. While a pullback
in auto stocks makes sense General Motors (NYSE: GM ) slipped 1.1% one cant
help notice that the market was about 1% or so higher than it is now when crude
prices contributed to stocks selling off by about 2%. As it was a dubious
development when the rally two weeks ago couldnt quite reach the 2011 highs set
in late February (on the S&P 500), it wont necessarily be a good sign if those
April highs become the new ceiling for stocks. A steady diet of earnings reports
over the next month may have a lot to do with that, naturally, but its funny,
bond traders didnt need to hear from Apple (NASDAQ: AAPL ) to take the 10-year
note yield back to its lowest levels of the month on Friday. With stocks looking
more uncertain that they can do much in the near term to improve on their 5%
gain in 2011, a 3.4% Treasury yield will become even more attractive.