The Japanese “Golden Week” is here.

The Nikkei market was closed on Thursday and Friday due to a week-long national holiday. This is the “Golden Week,” Japan’s equivalent of spring break. We’ll have to wait until Monday to see what mood their investors are in after the break. Will they be buying…or selling?

How long will the rally last?

Today’s market ties one of the longest rallies in the last 12 months. But it also set a record that you would have to go back 78 years to see. It rallied 22 of 24 consecutive days. Isn’t that a good thing? If you’re a nimble, short term investor, you could have made money. However, history tells us that these rallies are more quickly reversed than made. The reason? The last time this record was matched was in 1929 and 1987.

My indicators tell me that the percentage of stocks participating in this rally has been waning this entire week. In the meantime, investors seem drawn like moths to a flame.

Will the bond rally hold?

The dismal GDP numbers last week have Wall Street talking about a soft landing again, as they expect the Federal Reserve to lower interest rates. The problem is that, with the excessive debt already in our economy, the Fed doesn’t have that option. In addition, the inflation numbers are ghastly. Our overseas creditors won’t take kindly to a drop in interest rates while the inflation numbers are running so high.

U.S. Housing Market Meltdown

The details of the meltdown are being downplayed in the media to prevent panic-selling among the public. But the Fed knows what's going on. They know that “U.S. mortgage default rates hit an all-time high in the first quarter of 2007” and that “the percentage of mortgages in default rose to a record 2.87%”.

Here’s another excerpt from Mike Whitney’s The Market Oracle, “In fact, the Federal Reserve and the five other federal agencies that regulate banks issued this statement just last week: "Prudent workout arrangements that are consistent with safe and sound lending practices are generally in the long-term best interest of both the financial institution and the borrower… Institutions will not face regulatory penalties if they pursue reasonable workout arrangements with borrowers."

Translation: “Rewrite the loans! Promise them anything! Just make sure they remain shackled to their houses!” 

The dollar starts a rally from a two-year low.

The rally doesn’t look like much, yet. But it did turn up some intermediate indicators, which suggest some staying power for now. The next technical hurdle is the 50-day moving average, which is where most market technicians will recognize that the trend may have changed.

What does a strengthening dollar mean? While the debt bubble expanded, the value of the ever-increasing dollars in the financial system shrank. The reversal suggests that the dollar supply may now be shrinking, be it ever-so-little.

Every dip a buying opportunity in gold?

That’s what the pundits are saying. Ignore the 3.3% drop in the last two weeks. The bullish sentiment is still running very high for gold.

`Not Done Yet' 

``There is a belief that this bull market is not done yet,'' said Paul McLeod, vice president of the precious-metals department of Commerzbank Securities in New York. department of Commerzbank Securities in New York. ``The expectation is that the dollar will still weaken.'' Remember, expectations don’t make it happen.

“Shouldn’t they be doing something about this?”

Government officials have expressed concern about summer gasoline prices, but added they had no plans to temporarily relax environmental regulations to ease supply problems.

But AAA said rising prices highlights the need for government to take a closer look at energy policies.

"Today, we have $3.00 a gallon gasoline for the third time in the last three years. Alarm bells ought to be going off in the offices of every member of Congress and among the presidential candidates," said Sundstrom. The operative question is, “Will they?

Spring in the Mid-west, but Summer weather in the South…

…has spiked the use of natural gas in the U.S., according to the Energy Information Agency.  People in the Southeastern states have been experiencing hot, dry weather that has caused air conditioner usage to go up. This is putting pressure on utilities to pay higher prices in order to keep up with the surging demand, regardless of the surplus natural gas in storage.