Rallies Aren't Done for Gold, Dow

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Our View

Tell me I am wrong, but gold looks like it's going to $2,400 and the Dow (YM) is going to 40,000. 

While I didn't get everything I was looking for on Friday, I did exit my ES position at the 5250 area, but that doesn't mean I think the rally is over. Despite the mixed trade and low volumes, the first-quarter earnings season is turning out better than many Wall Street forecasters had expected. 

According to data compiled by Birinyi Associates, S&P 500 companies that have reported first-quarter results as of Monday have disclosed buying back $181.2 billion of their shares during the period, which is up 16% from last year at the same period last year. 

Goldman Sachs analysts project that total S&P 500 repurchases will reach $925 billion this year and $1.075 trillion in 2025, which would mark annual growth rates of 13% and 16%, respectively. I think that's driving the markets higher. 

This week is packed with 13 Fed speakers — including 3 today and Fed Chair Powell speaking tomorrow — 14 economic releases, and earnings. Wednesday will include both the CPI release and the Retail Sales report, due up at 8:30 a.m. ET. 

In particular, the CPI report will definitely test the validity of the recent rally. The April 10th CPI release sent 10-year Treasury yields surging 18 basis points, the biggest one-day move caused by the CPI data since 2002. I think you have to be on the lookout for a hot CPI number this week.