The Economy and The Market are Headed Higher

It's The Economy ( don't be stupid ! )

I have written a number of times - the economy is not going into a dive.
On Friday , April 18th , 2008 better-than-expected earnings results signaled a strengthening economy that may boost demand .

``The real gloomy scenario has been sort of ameliorated with some of these very positive earnings and the indication that the worst is behind us,'' said John Kilduff, vice president of risk management at MF Global Ltd. in New York. ``There will be an uptick in energy demand with the renewed economic outlook for the second half of the year in particular.''

The Global Economy is Growing -

Caterpillar ( CAT) Results are a good indication of that growth

The heavy equipment maker Caterpillar parlayed an increased reliance on international markets to surprisingly strong sales and a 13 percent jump in first-quarter profits, impressing investors who had expected the company to be slowed more by the weak American economy and dollar.
The stock surged more than 8 percent in Friday trading after company easily beat Wall Street’s earnings estimates, benefiting from its strategy of diversification.
Shares rose $6.69, to $85.28, in afternoon trading and are now up more than 40 percent since mid-January, to within $2 of their record high.

Global Sales :

Sales were up 37 percent in the Asia-Pacific region, 30 percent in the Europe-Africa-Middle East region and 24 percent in Latin America, compared with just 4 percent in North America.

Caterpillar executives said the weak dollar hurt the bottom line, with raw materials and other costs up at its international plants. But in sales alone, the currency impact added $310 million in the quarter.
Caterpillar earned $922 million, or $1.45 a share, in the January-March period, compared with $816 million, or $1.23 a share, a year earlier. That blew past the $1.33-a-share estimate of analysts surveyed by Thomson Financial.

Revenue rose 18 percent, to $11.8 billion, from $10.02 billion a year earlier, with $10.98 billion coming from machinery and engines sales and $817 million from financial products. A sales breakdown showed 58 percent came from outside North America, up from 53 percent a year earlier.

China Growth - GM Forecast

General Motors Corp, relying on overseas customers to counter falling U.S. demand, aims to boost sales in China by about half over three years as it adds new models and economic growth makes cars affordable to more people.
The automaker plans to raise annual vehicle sales in China by 500,000 in the period, Kevin Wale, its country chairman, told reporters in Beijing today. Last year, GM, the biggest overseas automaker in China, boosted sales by 19 percent to 1.03 million.

GM plans to spend $1 billion a year in China expanding its operations and trying to fend off competition from Volkswagen AG, Toyota Motor Corp. and other automakers. Vehicle sales in China have about quadrupled over the past eight years in line with the nation's surging economy.

Technical Indicators

I look for the January numbers to be the low of the year.
I bought JP Morgan after it announced the takeover of Bear Stearns in the belief that a market that could withstand the Bear Stearns collapse had taken the worst - and that the worst is behind us.

Another round of writeoffs at CITI and Merrill Lynch failed to put the market down.

Make out your shopping list - there are sales on in every sector - but the sales won't last more than the next few months. Energy is still going to lead the way and today's stock prices do not yet reflect the strong commodity prices. Neither does the general market reflect the positive change in prospects for the economy or your portfolio.
Jack Bass is the editor of the market letter The Apprentice Millionaire available at www.amprogram.com his newest book is " Building Your AMP Portfolio".