Stocks Settle for a Strong Week

The equity market seemed quite comfortable on Friday with its gain of nearly 3%
for April (and even  more if you're partial to the Dow or Nasdaq), and ended
up off its highs for the session with a modest rally. Of course, modesty is a
relative thing, and even the smaller push higher in stocks also meant another
2011 closing high for stocks – the Dow Jones Industrial Average tacked on
another 47 points to 12,811, the Nasdaq gained a point to 2874 and the S&P 500
1364. And where would we be without our standard rallies in other "hot"
asset classes notably oil, which pushed to a multiyear high above $114 a barrel
before settling just under that level, and gold and silver, which both touched
record and 30-year highs, respectively. Bonds, too, continued to rally, with the
yield on the 10-year Treasury note closing below 3.30% for the first time since
March 18. As one would expect, oil exploration and production companies caught a
bid, many of these of the small-cap variety that have shown signs of life when
crude has rallied. The Russell 2000 outperformed today with a 0.4% gain. While
small-caps were flexing their ability their momentum-sustaining muscles, tech
stocks, particularly large-caps, were decidedly not.  The most-active Nasdaq
issue, Microsoft (NASDAQ: MSFT ), slid nearly 4% on Friday after its earnings
report late Thursday suggested growth forecasts for its ubiquitious Windows
operating system were less than secure. Throw in a disappointing forecast from
Blackberry maker Research In Motion (NASDAQ: RIMM ), and you've set the table
for the Nasdaq 100 Index to fall 0.2%. (It's no coincidence, of course, that
both of these selloffs are a direct result to the encroaching kingdom of Apple
(NASDAQ: AAPL )). The larger takeaway, however, is that amid a broad market
rally, we've seen two losing days in a row for the index, which has
outperformed the S&P 500 by more than 5 percentage points since stocks started
their serious rally at the end of late August. This may mean nothing long term,
but it does suggest a higher degree of weakness in one of the rally's main
cogs. What's more, investors are running out of game-changing big companies to
show that corporate  profits are in no danger of slowing down (Sadly, Apple can
only report four times a year). It would seem logical that a declining dollar,
manic precious-metal rallies and crude oil's approach of $120 a barrel will
have a larger impact on stocks next month as corporate data points begin to
fade. Under that scenario, the "sell-in-May" approach could appear the wiser
move.