It is amazing how a little bit of time and a lot of disappointment can shift people's perspectives 180 degrees. For MONTHS now, folks have been afraid of a strong employment number because it would signal punitive interest rate increases from the Fed. Yet, month after month, the jobs numbers disappointed on the low side until finally the economic masterminds guiding expectations brought their estimates down and in-line with recent trends. And guess what? In classic style, the numbers surprised to the upside, roughly tripling expectations, and popping to levels that the Bushies have long dreamed about. Simply amazing. Amazing enough to get the buyers to forget about the Fed long enough to buy stocks left and right - except interest-rate sensitive stocks like financials and home-builders. The resulting rally has been a relief to many, but to me, it sure looks like stocks have popped right back into harm's way. Valuations remain high, earnings growth is peaking (or has peaked), the Fed is now lurking in the wings ready to keep a lid on rampant growth and inflation, and uncertainty grows everyday. Looks like a formula for duck and cover. While the major indices may revisit recent highs, it is hard to imagine squeezing much more out of this lemon for now. There are lots of headwinds building, least of which is the brewing disaster in Iraq.

Iraq has become a tragic "in harm's way" scenario. America has invaded under false pretenses and has concocted grand visions of Middle East democracy to legitimize our occupation. Yet, with each passing day, the "natives" get more and more restless with their benevolent patrons. American soldiers and civilians are constantly in harms way and many are paying the ultimate price. The recent brutal deaths of civilians broadcast across the world in all its flaming barbarism incensed our sensibilities. We cried out for justice and retribution. Our current promise to "crush the Shiite rebellion" signals a worrisome escalation in violence that is slowly but surely sealing the logic of the occupation. As we continue to suffer casualties, we continue to seek justice. And as we deliver justice, the populace, particularly the most rebellious members, feel even more scandalized and seek their own justice. We call them terrorists, and they call us imperialists and occupiers. Sooner than later, the original objective and mission becomes forgotten and violence is pursued for its own end, its own futile mission to seek ends. If I am correct in describing this cyclic descent into chaos and destruction, eventually the stock markets around the world WILL take note and WILL start to care. Sooner than later the slowing pace of earnings momentum will not be loud enough to drown out the troubling sounds from an illegitimate mission going from bad to worse. And if the American markets conclude from this cacophony that the Bush regime is on the verge of being changed, watch out below. Kerry continues to prove himself no friend to the markets, and you can bet that the "smart money" does not want to hang around to find out whether they are ultimately wrong or right about that assessment!

I have no timetable for how or when the next downleg of the market will transpire. Currently, the major indices have broken out of downtrends and are actually looking due for a new leg up. We even have the Dow Transports and Industrials breaking above their 50 daily moving averages (for price) at the same time…confirming the latest move up. This turn in the technicals alone is incredible given just a few weeks ago the Dow Industrials finally succumbed to the siren song of the Dow Transports sinking ever lower. I can only re-iterate that buy-and-hold is finally losing its appeal - selling can once again reap great rewards. If a trading range establishes itself then you can add buying on weakness to the strategy of selling on strength.

Now, earnings season has begun yet again. And the "Ides of May" beckon us right around the corner. And, oh yes, volatility is back at multi-year lows. Things can only get more, uh, "interesting" from here.

Be careful out there!